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UNIVERSITY OFNfORONTO 
DEPARTMENT OF PSYCHOLOGY 



'- \ 



PURCHASING 

AND 
EMPLOYMENT 



ORGANIZING A PURCHASING DEPARTMENT 

TRAINING YOUR WORKING FORCE 

HIRING AND PAYING HELP 




A. W. SHAW COMPANY 

CHICAGO NEW YORK 

LONDON 



600580 



Copyright, 1914, by 
A. W. Shaw Company 

Copyright, Canada. 1914, by 
A. W. Shaw Company 

Entered at Stationers' Hall, London 
A. W. Shaw Company, Ltd. 

Under the title 
THE LIBRARY OF BUSINESS PRACTICE" VL 

Reprinted 1917 
Printed in U. & A. 



CONTENTS 

I PURCHASING FOR STORE, OFFICE 
AND FACTORY 



Editorial 6y K J- Murphv ....... 7 

I SCIENTIFIC PURCHASING ..... . 9 

By Wheeler Sammotu 

II MATCHING PRICE AGAINST FINAL COST . . 29 

By J. V. Hunter 

III WHEN THE SALESMAN DROPS IN . . . . SO 

By Carroll D. Murphy 

IV WHEN THE BUTEB GOES TO MARKET . . . 44 

By Neil M. Clark 
V BUYING EQUIPMENT BT STANDARD . , . 51 

By Harry Franklin Porter. M. E. 

VI How TO AVOID PITFALLS IN BUYING ... 60 
By Fred Cook 



H SYSTEM IN THE PURCHASING 
DEPARTMENT 

editorial bv J. D. Lawman ....... f,y 

VII SHORT-LINE METHODS IN RETAIL BUYING . . 71 

By Neil M. Clark 
VIII How THE SUPPLY BUYER WORKS .... 78 

By Neil M. Clark 
IX FACTORY PURCHASING BY MINIMUM STOCKS . . 80 

By F. B. Johnson 

X ADAPTING A PURCHASING SYSTEM TO YOUR BUSINESS 93 
By Stunner B. Roger*, 
Production Manager. Sangamo Electric Company 

XI HOLDING THE SUPPLIER TO His BARGAIN . . 1M 

By Carroll D. Murphy 

XII How TO FILE PURCHASE DATA .... Ill 
By O. N. Manner* 

m HIRING AND TRAINING YOUR 
WORKING FORCE 

Xditorial 6y S. P. Ripltv ....... 110 

XIII WHERE TO FIND THE BEST WORKMBM . . . 117 
By W. S. Bail 



CONTENTS 



XTV HIRING FACTORY HELP 125 

By Surnner B. Rogers, 
Production Manager, Sangamo Electric Company 

XV How WORKMEN ARE FITTED TO THE JOB . . 131 

By Henry Beach Needham 
XVI MAKING THE BOY A BETTER WORKER . . . 139 

By L. I. Thomas 

XVII HIRING AND TRAINING OFFICE HELP ... 146 
By Marshall D. Wilber, 
President, Wilber Mercantile Agency 

XVIII BUILDING UP A RETAIL SALES FORCE ... 152 
By C. M. Jones, 
Formerly Superintendent, The Fair, Chicago 

XIX LEGAL POINTS IN HIRING AND DISCHARGING MEN . 158 
By Arthur E. Ooddard 



IV HANDLING AND PAYING HELP 

Editorial 6y H. L. Gantt 168 

XX PLANS AND CONTESTS THAT INCREASE EFFICIENCY . 165 

By William Hamilton Burquest 
XXI PAYING DIVIDENDS TO WORKERS .... 174 

By Kendall Banning 

XXII PLANNING AHEAD FOR THE WORKMAN'S NEED . 179 
By F. M. Feiker 

XXIII MAKING WORK INTERESTING 187 

By Harrison McJohnston 

XXIV APPOINTING THE EMPLOYEE His OWN JUDGE . . 196 

By A. L. Filene, 

General Manager and Treasurer, Wm. Filene's Sons 
Company 



SPECIAL ILLUSTRATIONS 

I WHAT THE BUYER NEEDS TO KNOW 11 

II BUYING METHODS IN INTENSIVE MERCHANDISING . . 15 

III STOCK CLASSIFICATION THAT SIMPLIFIES BUYING . . 25 

IV TESTING FIRST AND FINAL COST 30 

V LOSS DUB TO "CHEAPEST FIRST*' BUYING . . - . 31 

VI BOW TO JUDGE MACHINE "POINT*" . . . . A3 



PART I-PURCHASING FOR 

STORE, OFFICE AND 

FACTORY 

The Buyer's Responsibility 

CTOCKS that go into the store are the food 
^ with which strength is built. The method 
>f -riling, the courtesy, the display, important as 
they arr. only depose of that which you buy. 
The good buyer is the builder of your future, and 
as surely as time makes days into yr-tmla.v I, 
just so surely the buyer holds within his hand 
the major part of your business destiny. 

Mr. Buyer, remember that the net cost, the 
net quality, the net value, and the net possible 
selling price >|ia|>e your results. 

Labor and material have advanced steadily, 
and, to keep the wheels of business in motion, 
you must realize that the price paid is to be 
judged only in relation to the values .secured. 
Business counts, loyalty counts, and each buyer's 
mite toward helping our big national industries 
counts in the pro6ts of all. 

Build so that your business may whisper to 
you at the end of a year that the tide ha - 
carried you out. away from Achievement rightly 
won, to leave you to sink a loser. 





M. J. MURPHY 

President. Murphy Chair f'omjtany 



SCIENTIFIC PURCHASING 

By Wheeler Summon* 

RIGHT buying is like the healthy constitution which 
pulls you through a fever you don't think much 
about it until the doctors mention it. You will not 
know the real worth of your buying policies until they 
are tested by one of the temporary periods of hard sledg- 
ing through which business tugs from time to time. 

Indications of trouble which scudded ahead of such 
a recent depression gave the purchasing agent for a 
Connecticut manufacturing firm an opportunity to dem- 
onstrate in dollars and cents the value of right buying 
during business stress. He is famous for the sagacity 
with which he follows market tendencies. Analysis 
of his information files containing bank statements, in- 
vestigation reports and clippings from trade papers 
called to his attention the earliest signals of the de- 
pression. He immediately reduced his material pur- 
chases to the lowest ebb possible. As he expected, th- 
slump drove the raw material down to unprecedented 
price levels. His stock room reports of material on hand 
were hovering around the zero mark. 

The president of the company called him into th< 
office and said, "Blake, we're in difficulties." They 
stepped to a window beyond a secretary's earshot and 
overlooking the sawtoothed roofs of the factory build- 



10 HOW TO BUY 



ings. "We take pride in the record that our men have 
never been without work, but I can't keep going in the 
face of cancellations which the slump is bringing. I'm 
afraid we'll have to close temporarily before the week 
is out and you should purchase accordingly." 

"I've been having some long thoughts on conditions 
and I'm prepared for that, Chief," the purchasing 
agent replied. "The material on hand don't amount to 
a hill of beans. But I think I 've got a better solution. 
We can buy today in the open market raw material at 
from thirty-five to forty per cent below normal prices. 
Why don't we buy, make up a few attractive special 
lines and offer them at about half our Usual prices? 
The retailers have got to sell something, slump or no 
slump, and they can not resist such a slash. It 's worth 
breaking a little less than even if we keep the men 
busy." 

The special lines, rushed into the market, unidentified 
by trade marks, sold splendidly without injury to the 
company's regular, price-maintained products. Today 
the company counts the loyalty of its men the most 
valuable of its intangible assets. The feeling, openly 
expressed by the older workers, that "We'll have jobs, 
no matter what happens look at the last time there was 
trouble and factories in our line closed down we kept 
working right along," wins an interest in its progress 
profitable to the company. 

WHERE and what to buy are the first big problems 
detailed information regarding your needs must 
be supplemented by accurate knowledge of suppliers. 

Accurate market information and detailed reports on 
your sources of supply make for right buying in both 
the factory and the store. Today men who buy to sell 



FORECASTING DEMAND 



11 



again use intensive merchandising methods; men who 
purchase for production work with practically the same 
principles. Intensive merchandising and the new way 
of buying materials have a common object and both 



BUYING IN 
THE NEW WAY 



INFORMATION 

ABOUT 
MATERIALS 



Bounces ANO VOLUMC or U*LY 

ONAPMIC ftCCOMO* Or PMICC* PAID IN PAST 
MAHKCT MOVEMENTS 

roftECAST or SUPPI* ANO CONSUMPTION 

PMICC FLUCTUATION* 
PftOOUCT TCNDCNCIC* 



f rTANOANOIZCO rACTOHT NEEDS 
PURCHASING J DETAIL SPECIFICATIONS 

METHOD* | MAXIMUM ANOMINIMOM TOCH WHIT* 

I SCHEDULED OCLIVCRI t 



TESTS or 

MATERIALS 
ANO PRODUCT 1 * CT 



I INSPECTION SYSTEM 

I LABORATORY MEPOMTS ON RAW MATEHIALS 



FIGURE I: Information and methods which enable the modern buyer 
to tecure the right quantity and quality in his goods are here lifted 

come of straight thinking, sound planning and a desire 
for scientific methods. 

You desire to know exactly what you can get and who 
is best able to supply your wants when you go into the 
market. To secure this information, purchasing agents 
visit frequently the sources which furnish their raw 
materials and carefully investigate delivery and pro- 
duction capacities. A record is kept of formulas and 
working drawings. It is also important to know about 
the man who makes what you use, and about his fac- 



12 HOW TO BUY 



tory, and his workmen, and his bank account. File 
these facts on cards and constantly freshen them; ar- 
range market and product tendencies to be accessible on 
a moment's notice; clip the trade magazines carefully; 
question salesmen and see that quotations, price fluctua- 
tions and credit ratings are recorded. But only by per- 
sonal investigation can the, man who buys raw material 
in large quantities get the detailed resource information 
he needs. 

The retail buyer always has his weather-eye open for 
attractive "jobs." He "sweetens" his stocks with them. 
There are also "snaps" in the purchasing agent's mar- 
ket. The successful retail man buys for his community 
and hands on the profits from "snaps" to his customers 
through reduced prices. His reward is a quick stock 
turn and new friends. More indirectly, but not less 
definitely, the factory buyer wins when he buys close to 
the market, for he also is hired by the community to go 
to market. He cuts prime costs and gives better service 
when he makes good. His rewards are increased sales 
and more friends. 

Having found where and when you can most advan- 
tageously get what you want, the second problem is to 
fix your own needs. The employment man standardizes 
the requirements of a job, and looks for a man to fit. 
The retail buyer analyzes the conditions his stock meets. 
The purchasing agent works to get down in black and 
white the standards up to which his raw material must 
measure. His market and resource information then 
enables him to satisfy to best advantage these standard- 
ized needs. 

To standardize your wants it is necessary to consult 
with the department heads or foremen. You will find 
technical advice and information invaluable. The stan- 



FORECASTING DEMAND 13 

dardized needs can then be filed on cards which will tell 
at a glance exactly what you expect of the supplier. If 
a standard 60-mesh cloth is not satisfactory, for instance, 
the standardized requirement card specifies that a spe- 
cial 65-raesh weave is needed. Dimension lumber is an- 
other instance it usually offers savings, and standard- 
ized needs enable it to be definitely specified whenever 
possible. 

The card file of standard wants, if it is to give full 
value, demands frequent overhauling. One manufac- 
turer goes over the cards every six months. He plans 
to make standard at these semi-annual inspections any 
improvements or inventions offered by the market. He 
uses raw material made to many formulas, each fitted 
to the demands met by the particular product into 
which it is to be moulded, and the mixtures require re- 
standardization in order to keep up with everyday 
progress in applied science. 

Once your requirements are standardized and you 
know where they can be satisfied profitably, it is pos- 
sible to buy by specification. If you are purchasing 
paint, pig iron or tool steel, you can usually specify a 
formula determined by your standardized needs. Bab- 
bitt metal, for instance, is commonly mixed to specifica- 
tion if 85 per cent of tin is specified you can see that 
it, and not 20 per cent of tin and 65 of lead, is there. 
A saw manufacturer specifies sixty odd formulas in his 
mill contracts and samples every shipment to see that 
it satisfies his specifications. His photo-micrographs 
and acid immersions enforce contracts and assure him 
full value. 

Equipment buying, after your wants are standard- 
ized and the sources studied, is also a matter of specifica- 
tion. Both the planer and the new unit type selling fix- 



14 HOW TO BUY 



ture are valuable only in proportion to producing capa- 
city. You, therefore, set up standards that enable you 
to specify feeds, ease of manipulation, constancy of op- 
eration, accuracy, speeds and range of capacity. Then 
you figure the customary charges labor, power, inter- 
est, supervision, depreciation, space and repairs. First 
cost being a secondary consideration, the one calculation 
left is to find capacity by combining the charges and the 
needs. A Rhode Island manufacturer cut his collar 
milling cost fifty-five per cent by closing his eyes to first 
cost and replacing a modern one thousand dollar machine 
with a new, high capacity model at two thousand five 
hundred dollars. 

OTANDAKDIZATION of your needs means that you 
^J can buy by specification and laboratory inspection 
test's assure you of receiving the right quality. 

The final question the purchasing agent struggles with 
is : ' ' Have they given me what I bought ? ' ' You study 
the manufacturer, analyze the visible market supply, 
make standards for your wants, specify these needs in 
your contracts and then the whole scheme falls flat 
unless you check to see that the supplier has lived up 
to it. You test and inspect. The larger manufacturing 
plants have put laboratories on their pay rolls. Since 
the laboratories are also used to determine specifications 
and test the finished product, at least a portion of their 
expense can be legitimately charged directly to produc- 
tion. The laboratories may be set to check three points : 
the quality, quantity and fitness of the raw material; 
process standardization and economy; and analysis of 
material consumed. 

If you can not afford a testing office or a chemist, the 
services of reliable commercial laboratories are on the 



FORECASTING DEMAND 



market. These organizations make tests of all degrees 
of complexity at nominal charges. If you are purchas- 
ing equipment, use your competitors' shops as laborato- 
ries, and watch in them machines working under prac- 
tical conditions. But a laboratory is often not half as 
formidable as its name. .Numerous firms have taken 





(%ABT BALCB BCCOHOB 












1 








TMIICI ruu. LINCB 








MMUi 








IHTIHMtDIATC PftlCIO BOTMf T 


INTENSIVE 


THC BUYING 
PLAN 


LINO BCLOW CMCAPtrr fULL LINt 


MERCHANDISING 




"OUT- Bins 








I ABONAL NOVt LTIC 








^MOUBt PCCIALTIC* 








MICOMDB Or IAKLV Of HAM 


OB 




TCST Of 


"WANTCO" BLIPS 






PURCHABim 


SMOPPtW MCPOMT* 




* 


HCPOIIT* BY CMPLOTCCB A 


NO rmcNO* 




j>ecooo or COMPLAINT* 





FIGURE II: How the buyer classifies hit ttoclu, tests out new lines and 

determine* demand this chart shout the characteristic working method* 

of the buyer in intensive merchandising 



bright young fellows out of the shops and trained them 
into first class practical chemists. Six months of special 
schooling is not an unusually short formal preparation 
for this work. 

Buying by test demands delicate and complicated in- 
struments which put the scientist at the purchasing 
agent's elbow and supplement the expert's trained eye. 
Dynamometers fix motive power, scleroscopes pass or 






16 HOW TO BUY 



reject steel with an authority beyond dispute, torsional 
machines measure twists, and the pyrometer watches 
heat. The purchasing agent can measure compression 
and tensile strengths with an accuracy equal to the 
insurance doctor's manometer blood pressure test. The 
balancing machine by which the factory buyer deter- 
mines if a crankshaft is capable has anticipated the 
psychologist's delicate experiments for picking men to 
fit the job's demands. It's worth while when signing a 
contract to know that you can pick up a sample cutter 
and find out if it really contains the 8y 2 per cent of 
molybdenum you specified. 

The purchasing agent doubly tests his work by linking 
the laboratory findings with a cost system. Quality and 
delivery come before cost, but raw material charges de- 
mand investigation if they run away with the net 
profits. Cost accounting systems enable you to trace in 
detail the part purchases play in fixing the selling price. 
"With their aid you can figure standardized buying limits 
and work to secure unusual quality at profitable costs. 

Forewarned by accurate, systematized market and sup- 
ply knowledge; guided by approved standards for his 
needs, and protected by reliable laboratory and cost 
accounting tests, the buyer is prepared to figure out 
how much and when, under normal conditions, he should 
buy. Goods purchased year in and year out in reason- 
ably constant quantities are usually bought under con- 
tracts calling for scheduled deliveries. This plan gives 
the supplier an opportunity to lay out his work in 
advance. You share in the savings which result. Inter- 
mittent needs can be satisfied through current buying 
adjusted to capitalize the most favorable market con- 
ditions. 

Routine buying, if done by standards, specifications 



FORECASTING DEMAND 



17 



and tests, becomes nothing more than a question of when 
to go to market You want some sort of an alarm which 
will warn you at the proper time to be up and doing. 
Standardized maximum and minimum stock limits, 
which a few weeks of testing will almost automatically 
fix, serve this purpose. You can then index these limits 
on cards which give a perpetual inventory, the costs, 
the resources, and the order authorizations. A manufac- 
turer of electrical goods uses the form (I) illustrated. 



TO. PKG 


LOCATION 


DESCRIPTION W.C.NO. 


Mrw* .NO. 


MtMMUM MAXIM 


1IM CtASS'N 


ft 


^.^, 


MTC 


VTlT* 


^^o,,. 


.MM.M 


MM 


CCfnrt* 


[no int MMOT BtTMaT 


















1 




























1 




























I 




























1 




























1 




























1 




























1 




























I 


























1 




























1 















FORM I: A card like thii Iceept a perpetual inventory on each kind of 

good*, thawing amount on hand, maximum and minimum limit*, quant it iet 

ordered, and other information which helps the purchasing agent 

The left-hand columns are for the inventories, the next 
six columns tabulate the orders, and the spaces to the 
right handle cost details so that they can be constantly 
compared. The two squares in the upper left-hand cor- 
ner care for the standardized package size and the shelf 
location in the stock room. References to the card file 
of detailed resource information, the market informa- 
tion file and the cost accounting classification sheet are 



18 HOW TO BUY 



provided for by the three blanks in the upper right-hand 
corner. 

Right buying for the factory with supply and mar- 
ket records, standardized requirements, accurate specifi- 
cations, satisfactory tests, and maximum-minimum order 
limits is only intensive merchandising in terms of man- 
ufacturing, equipment or supply purchases. The inten- 
sive merchandiser and the purchasing agent who buys 
right use the same principles and want to do well the 
same task making it easier for somebody, somewhere, 
sometime, to sell. The retail buyer purchases goods to 
be sold in his own store; the factory man gets material 
in one market which the boss's salesmen sell in another 
market. Buying raw material right helps when the 
prospect's door is reached and the sales talk started. 

BUYING methods used by the merchant are not essen- 
tially different from those of the factory buyer how 
past sales records help forecast future demand. 

Twelve pink call slips for sweaters lay on the buyer's 
desk. Twelve customers had asked for sweaters, found 
a depleted stock and taken their money to rival stores. 
Sweaters were at a premium. Unexpected popularity 
had exhausted the manufacturers' stocks and set a day 
and night schedule for the mills. Purchasers gladly 
paid unusual prices to the lucky stores which were still 
stocked. 

The buyer, who knew he must either replenish his 
stock or continue to lose fancy profits and regular cus- 
tomers, went to the merchandise manager. 

"Mr. Simpson," he said, "I am telegraphing Hastel 
that we will pay $5 for their regular $4.50 sweater, and 
take three hundred and fifty-five dozen if we can have 
immediate delivery. I am sure of my market. I am 



FORECASTING DEMAND 19 

sure that Hastel will act without holding out for more 
when he sees the extra profit. The market is bare at the 
regular price. Will you 0. K. the order T" 

"You are paid to know your manufacturers and the 
market," the superior replied, and approved the order. 

The sweaters arrived by express the next day. They 
sold satisfactorily at sixty cents over the usual retail 
price and pleased four thousand two hundred and sixty 
customers who found it difficult to locate full stocks 
elsewhere. The manufacturer made two thousand one 
hundred and thirty dollars, besides his customary 
profit, and the store cleared the regular mark-up in- 
crease by four hundred and twenty-six dollars. 

The buyer had been guided by card records of his 
dealings with Hastel, tabulated reports of sweater sales, 
and filed market information. The Hastel "resource" 
card gave the store's total yearly purchases from Hastel 
for five years back, the mark-downs, the terms, the an- 
nual profit resulting, and added : ' ' The product is peri- 
odically tested and has always been satisfactory. The 
sales are good and our mark-downs on this resource are 
limited. Hastel can make quick deliveries and, though 
always striving for the best profits, he takes reasonable 
profits and holds to contracts." A complete report on 
the Hastel factory and the financial condition of its 
owner was filed with the card. The general files on mar- 
ket information traced style tendencies in sweaters and 
collected clippings which hinted at growing popularity. 

Sales figures divided for five years the average num- 
ber of sweaters sold into three price lines low, medium 
and high. The buyer found that between twelve thou- 
sand two hundred and fifty-five and twelve thousand five 
hundred and two sweaters had been sold annually for five 
years in the medium-priced line. His opening stock of 



20 



HOW TO BUY 



twelve thousand five hundred had been exhausted in 
about two-thirds of the selling season. He counted. on 
the unexpected popularity to move an extra hundred or 
so, and ordered four thousand two hundred and sixty 
from Hastel. 

The following sales figures are tabulated to bring 
out three full lines: 



) 

January . . . 
February . . 
March .... 
April .... 
May 


!3.10 
180 
131 
92 
214 
261 


$3.45 
201 
234 
251 
305 
273 


$3.90 
81 
206 
101 
48 
62 


$4.50 
675 
821 
805 
981 
1,463 


$5.15 
19 
71 
8 
76 
181 


$5.95 
86 
214 
162 
185 
436 


June 


292 


204 


81 


2,022 


102 


1,021 


September . . 
October . . . 
July . 


141 

202 
83 


302 
265 
209 


35 


599 
541 
2,141 


1 

18 
39 


28 
86 
621 


August . . . 
November . . 
December . . 


65 

301 
262 


151 
241 
343 


ei 

92 


804 
601 
802 


22 
21 


51 
125 

241 



2,224 2,979 767 12,255 558 3.256 

The lowest priced full line is at $3.45, the medium 
priced at $4.50, and the highest priced at $5.95. The 
$3.10 line is the cheapest advertised. 

Stores which buy to sell quickly and secure rapid, 
profitable turnovers, carefully record sales tendencies, 
sales figures, market knowledge and information about 
manufacturers. They find it worth while to let manu- 
facturers know that the profit or loss on every article 
put into stock is watched. They have subdivided sales 
until the buyer can put his finger on several profitable 
prices usually low, medium, high and show how much 
stock his department normally markets in these lines. 
Buyers backed with these records go to market fore- 
warned. They are prepared to buy scientifically. 

Intensive merchandising, a new term in the retailer's 
vocabulary, simply means using market and sales and 
supply and customer knowledge in a system by which 



FORECASTING DEMAND 21 

thin stocks can be sold quickly. Intensive merchandis- 
ing, therefore, plans for quick turnovers with a profit 
on each. Merchandising will come as near to being a 
science as a business can when buyers are able to go to 
market with such a system. 

INTENSIVE merchandising require* the use of ideal 
A stock- plant built around classified line* of good*, and 
the ability to be always ready to buy. 

A merchant whose name is known the length of the 
northern Atlantic coast and who has lifted his store "by 
its boot-straps" to a yearly sales volume high in the mill- 
ions, declares, "give me a buyer with very little ex- 
perience, but who uses a system which insures rapid turn- 
overs, in preference to the man gray in market knowl- 
edge and old in contact with goods. The intensive mer- 
chandiser new to the market can hardly help buying for 
profits which will at least double what the older man has 
been averaging from the market for a quarter of a cen- 
tury." 

A system which gives intensive merchandising this 
advantage calls for two methods a plan for suitable, 
thin, complete stocks; and a way always to keep in the 
market ready to buy. These two methods must be sup- 
ported by schemes for gathering effective market and 
sales knowledge. They must be constantly tested by a 
definite system. Surrounded by these precautions; they 
are the beginning and the end of intensive merchandis- 
ing. 

Salable, thin, complete stocks are secured by buying 
according to ideal stock plans. These plans are usually 
built up and around three lines a lowest priced, a 
medium priced, and a highest priced. Estimates for 
safe purchasing limits are made from records of the 



22 HOW TO BUY 



sales of these lines over previous years. The stocks are 
often bought on a basis of a clearance every three 
months, or four turnovers a year, and are complete in 
styles, sizes, colors and materials. The number of turn- 
overs for which you can safely plan depends entirely on 
the nature of your business. 

The lowest priced full line in a three line basic stock 
retails for the price at which large sales commence ; the 
best selling full line marks the most popular price ; and 
the highest priced full line sells for the highest price at 
which quantities can actually be sold. For example, a 
well-to-do woman buys the best selling line for everyday 
use ; the customer with a less liberal purse will buy from 
it only for Sunday wear. The woman who can spend her 
money freely will buy, let us say, $1.50 gloves. The 
woman who must economize will not pay $1.50 unless 
she desires the gloves for dress occasions. The one wears 
the quality glove every day; the other on special occa- 
sions only, her daily glove being cheaper. The best 
selling full line for your gloves will probably, there- 
fore, be at $1.50. You will find little trouble in locating 
your full lines by accurate sales records, careful testing 
and close observation. 

Once the lines are located, the remainder of the stock 
plan is easy sailing. You have studied your source of 
supplies and decided on the typical pieces you will 
offer your customers. You can now figure on the less 
important stock. A cheapest advertised line and a cheap- 
est regular priced line are usually carried below the 
lowest priced full line to give publicity values and ac- 
commodate unusual customers. Small quantities at be- 
tween-line prices will fill in the price gaps which divide 
the three full lines, and novelties are often carried at 
prices above the highest priced full line figure. 



FORECASTING DEMAND 28 

Each full line has five subdivisions. First of all, it 
carries the best articles in your city at the price. On 
these you plan to build trade and expect little, if any, 
profit. The second sub-line is a more profitable article 
which, because of added "ideas" and touches of finish 
or fashion, will sell in at least equal quantities with the 
best-in-your-city line. Then there are staples, novelties 
and sizes. It is worth while to also prepare to secure 
unusual stock with an advertising value a short-waisted 
coat, a shoe for cripples, a novel perfume or a rare drug. 

In buying stock to fit a basic line plan, you first get 
the best-in-your-city sub-line of the lowest priced full 
line right. Then decide upon the same feature in your 
best selling full line. This will force you to fix the full 
lines. You will naturally lay out your samples and your 
stocks to see that they fit into these lines and compete 
with themselves. If the stock is laid out regularly once 
in two weeks, the full lines can be carefully checked. 
When your goods fall away from the full lines, profits 
will not continue unless the stocks are hammered into 
shape by mark-downs or new purchases. 

The planned stocks when estimated can easily be pur- 
chased on a definite basis which prevents overbuying. 
Establish a rule that your stocks shall not exceed the 
sales you feel sure you can make the next month and 
that your orders for delivery the next month shall not 
at the end of the month exceed one-half the sales you 
are positive will be made the next month. 

These rules will prevent stock growing old and leave 
you always free to buy unusual offers. They will help 
you only if you make laws of them. A buyer for a large 
carpet house which uses scientific merchandising meth- 
ods attended an auction which threw four million dol- 
lars' worth of carpets into the markrt. His rivals could 



24 HOW TO BUY 



not resist the unusual offerings and bought heavily. He 
held to his rule, "Buy only one-half next month's sales." 
He had not been back at the store a week before he re- 
ceived word that a second and totally unexpected auction 
was to be held on account of market changes. This sec- 
ond sale announced new patterns normally held for the 
regular trade. His rivals could only buy at a danger of 
heavily overstocking. He was still free to buy, and 
secured plenty of fresh, new patterns at remarkable 
prices. 

r I BESTING demand for the goods you select is essential 
1. in buying by the basic line plan three methods 
which help you use the customer's own eye. 

When stock has been bought to a basic line plan, it 
must be tested carefully for completeness and sales value. 
The work of studying the market and your manufactur- 
ers, of planning out the basic lines, of keeping always 
open to buy under the two rules all may go for nothing 
if you fail to test and make sure you are right. Testing 
in done in three ways: a ticket system, call slips and 
shopping rival stocks. 

If you are selling wearing appearel, for instance, and 
have made several guesses at what will be popular, you 
can mark this new stock with pink tickets, which are a 
warning against selling. Keep the tickets on the goods 
for several weeks and record all decisions to buy. Offer 
to secure duplicates for customers, but forego sales if 
they cannot wait. Within a few weeks the records on 
the pink tickets will point the one or two popular styles. 
Then take off the tickets and place small re-orders for 
the popular styles which customers have picked for you. 
Your first buying was a guess, but your re-orders will 
be the choice of your customers. 



FOKKCASTIM; DKMAND 



The work of the ticket system can often be safely 
supplanted by watching your purchasers. Pick out a 
typical custonu-r who usually buys in a full line the 
lines represent classes of customers and find out how 
your season's selections at the line price please him. 
Do this for all the full lines. Your friends and your 
employees can also help you test out your stock. 

Want slips are blanks tilled out by the salesman whi-n 
a customer's wants can not be supplied from stock. They 
are not of full value unless salespeople are continually 



THE BASIC 
STOCK PLAN 



CHEAPEST REGULAR LINE 
LOWEST PRICED ADVERTISED LINE 

'CST AMTICLC IN TMC CITY 
re ATURC SI 

LOWEST PRICED FULL LINC ! .,<,., NOtffLTie . 

"OUT- SIZCS 
MOUe Sf CIALTICS 
INTERMEDIATE PRICED ASSORTMENT* 

'1ST AMTICIC IN TMC CITY 

rcATunt SUSLINC 
CST SELLING FULL LINC 

"OUT SIZC* 
V MOOSC SPCCIALTICS 
INTERMEDIATE PRICED ASSORTMENTS 

'CST AMTICLC IN TMC CITY 



HIGHEST PRICCO rULL LINC 



mnn 

IASONAI NOVCLTIC* 
"OUT" IICS 



ASSORTMENT ABOVE HIGHEST 
PRICED FULL LINE 



'IK III: The modern buyer classifies ku stocka in high-priced, 
medium-priced and loic-priced lines, and alto according to popularity 
among hit customers 

encouraged to use them and you act upon them at once. 
It is worth while to keep a careful record of the goods 
asked for on the slips. There is no necessity to place 
bulk orders when filling wants for unusual stock, but 
breaks in regular lines demand immediate correction, 



26 HOW TO BUY 



Shopping is a third way to test your buying. Large 
stores employ expert shoppers to go over rival stores. 
A small retailer can either shop himself or use a sales- 
man's spare time. It is important to make sure that 
the shopping reports are well founded before acting on 
them. {Department stores instruct shoppers ' to visit 
their own stocks and criticise impartially. 

After all, in buying, goods are only worth what they 
will bring. Your customers set this deciding figure. 
You plan to buy with their eyes ; you test to make sure 
that you have succeeded. This is only self-interest 
but a kind of self-interest from which always springs 
business and community progress. Every subdivision 
of a line represents a class of customers. When you 
carry these different lines you are giving maximum 
service, for you have practically fitted your pieces to the 
economic levels of life. The bank president has his 
full line, and so also the bank's messenger, and both 
benefit from the savings of a common roof and a common 
management. Then you ask the bank messenger, and the 
banker, and all the rest of us, to vote for what we want 
most in our price lines. You buy according to this vote 
buy as a paid, selected representative of the com- 
munity. Service well done for the community either 
right buying or right law making is well rewarded. 
"Intensive merchandising" is only a shorter way of 
saying, "Know your customer and buy accordingly for 
a quick turnover." 

The best place to meet your customers is at the coun- 
ters. A system for scientific merchandising is valuable 
because it assigns the detail to an ambitious clerk's 
spare time or an assistant buyer and leaves you free to 
buy and sell. Watch the purchasers and hear what 
they say about your stocks. The goods may look differ- 



FORECASTING DEMAND 27 

cut to the customer than they did to you under the care- 
fully selected surroundings of a New York salesroom. 
Your ears may burn first on one side of your head and 
then on the other. But whether the criticisms are favor- 
able or adverse, correct errors and capitalize successes 
at once. Your customers are always right, and there is 
no reason for hesitating. 

It is worth while, whether you buy for a little shop 
a department in a big city store, or run a place of your 
own in a town, to record your customers' wants individ- 
ually. Make out a card for each steady purchaser, and 
have a bright salesman jot down on it what is bought. 
You get then a little detailed picture of the big pano- 
rama which your sales statistics supply. Run over these 
cards on a dull afternoon and have a silent customers' 
conference. The cards are used by both big and little 
stores to supply lists for mailing follow-ups and notices 
of special sales. 

Right buying of materials, to be shaped into prod- 
ucts ; of goods, to be sold again ; of equipment, to handle 
manufacturing and selling; of supplies, to satisfy the 
daily wants of business is one of the great steps in dis- 
tribution. Unsystematic, blundering distribution levies 
an invisible tax on the clothes you wear, the food you 
eat and the utensils you use. Prosperous and youthful 
people, we have shouldered the tax cheerfully ; growing 
older, we plan to reduce it in order to preserve our 
prosperity. Business men in all the great cities see the 
need, and are thinking out their distribution problems 
to economical, sound methods. Thousands of business 
men in towns are helping to set distribution aright by 
careful buying according to tested principles of which 
their fathers were ignorant. 

Their motives are selfish the business man must 



28 HOW TO BUY 



either buy right when distribution has tightened, or go 
into the receiver's hands. But the reaction is to your 
benefit and for the community's welfare. Men who buy 
right make life easier for others render a good service 
to the country. 

Developments in distribution have been remarkable. 
The buyers who are growing old in the harness tell mar- 
ket stories which are all but incredible to their succes- 
sors. Still more effective developments are to be ex- 
pected. "The next ten or fifteen years will see greater 
changes in distribution than the last decade," declares 
the president of a store known from coast to coast and 
beyond. "My wholesale departments have raised the 
credit standing of an entire section of this country by 
showing retailers how to buy. Our work is only started." 



nPITREE things requisite in a buying organization are: 
* first, a set of able, experienced buyers; second, one man 
at the top to coordinate, unify, and direct in a general way 
the work of these buyers; and third, a system which will get 
the best prices, the quickest shipments, and an absolutely 
accurate knowledge in regard to stock on hand. 

Every M. Paget 



II 

MATCHING PRICE AGAINST 
FINAL COST 

By J V Hunter 

RAW material is a most important element of factory 
cost in almost every manufacturing business. Yet 
labor cost is generally watched more closely. How the 
manufacturer does his purchasing often determines very 
largely whether red or black figures will show up on 
the balance sheet at the end of the year. 

Too often the factory manager, buried in the near view 
of his problems and trusting to a subordinate to tend 
to this important phase of his business, allows the mar- 
gin which would determin~ financial success to slip away 
through unscientific purchasing. The criterion is too 
often buy the cheapest. But cheapest in first cost 
is by no means always or oftenest most economical in 
final cost ; and it is from the angle of final costs that a 
manager must view his purchases. 

The unwisdom of a purchase based on lowest first 
cost is illustrated in Figure IV. In this particular case 
the purchasing was entrusted to a purchasing agent 
who had been appointed to his position because of his 
ability as a clerk and bookkeeper, but who knew little 
or nothing about manufacturing. Nor was he provided 
with specifications governing the quality of the materials 
he should purchase. Naturally enough, he tripped upon 
cheapest-in-first-cost. He bought some three-year maple 



so 



HOW TO BUY 



for early use. The purchase was delayed several weeks 
during which time the material should have been on 
hand and drying while he was writing all over the 



122%* 
119% * 

114%* 
107% 

100% * 

98% * 


FINAL COST 






REPLACEMENTS OF PARTS IN STOCK 


LABOR LOSS FINISHED PARTS 


MATERIAL LOSS FINISHED PARTS 


LABOR LOS 


>S WORKING SCRAPPED PARTS 
FINAL COST 


FINISHED PARTS LABOR LOSS 


MATERIAL LOSS FINISHED PARTS 


96% 

91% * 


SCRAP IN 


RE-WORKING SHOP 


LABOR LOSS WORKING SCRAPPED PARTS 


SCRAP IN RE-WORKING SHOP 


86% 

76% 

74% * 


SCRAP IN 


"SAW MILL" ~* 


SCRAP IN SAW MILL 


LOSS IN YARD 


COST OF GOOD 


LUMBER 


66% * 


LOSS 


IN YARD 


COST OF 


LUMBER 



FIGURE IV: The final cost here should have been 100%. Owing to the 

purchase of cheap materials, losses in working up the materials brought the 

actual final cost to 122% 

country for prices, in order to save a few dollars per 
thousand. The lumber came only half cured. The fac- 
tory was obliged to work it up at once. Consequently, 



FIRST AND FINAL COST 



there was a heavy loss through the checking, warping 
and twisting out of shape of finished parts. The pur- 
chasing clerk was pleased at a saving in purchase price 



NEW COST TO FACTORY 








DELAY OF REGULAR WORK 




REHANDLING AND DELIVERY 




SHEARED TOO SHORT SHOP LOSS 




INTEREST ON SHOP EQUIPMENT 


100% 


DEPRECIATION AND REPAIR OF TOOLS 
ORIGINAL TOTAL COST TO FACTORY 




RE-HANDLING AND DEI 


(VERY 


9T% 


POWER 






RECEIVING AND_ 


STORING 

1 

1 




NET 


WASTE 




LABOR SI- 


EARING TO LENGTH STC 
_.. 


CK CUT TO 
LENGTH 

I 
1 




DELIVERY 


TO CUTTING SHOP 

< 


6Tt% > 


UNLOAD 


.. - 


68% > 


STOCK IN 


UNCUT LENGTHS 



I'!' -''RE V: Lack of cooperation between the purchasing department 

and the thop, at here thovm, resulted in a loit of fife and one-half per cent 

instead of a tuppoted taring of three per cent 



of seven and a half per cent, shown on Figure IV as the 
difference between sixty-six and one-half and seventy- 



32 HOW TO BUY 



four per cent. Actually, however, there was a loss on 
this lot of lumber of twenty-two pe"r cent. 

ECONOMICAL buying very often results in the 
selection of the article which at first seems most 
expensive determine your needs, then consider price. 

Another case is illustrated by Figure V. Here again 
the purchasing department was uninformed as to prac- 
tical conditions. The shop had previously bought cer- 
tain stock in cut lengths, thus avoiding the labor of cut- 
ting. The purchasing clerk asked the superintendent 
what it cost in direct labor for cutting to length, allow- 
ing a proper per cent for waste in cutting. On this 
basis he figured they could save three per cent by buy- 
ing the undimensioned lumber and cutting it up them- 
selves. Elated, he called this saving to the attention of 
the manager and claimed credit. What the actual saving 
was, or, rather, was not, is shown by the diagram (Fig- 
ure V). The clerk forgot to take into consideration 
such items as power, depreciation and repairs, interest 
on investment in shop equipment, expense of extra han- 
dling involved, and delay incurred in regular work. So 
instead of a saving in material of ten per cent and an 
apparent net saving of three per cent, there was, in real- 
ity, an actual loss of five and a half per cent. 

Now, if the buyer in either of these instances had had 
practical experience in the shop or experience in figur- 
ing cost, or if he had been guided by specifications and 
instructions prepared from the point of view of the 
man in the shop and the cost expert, he would have 
wasted no time in attempting to buy the cheapest kind 
of lumber. Many factory managers tolerate purchas- 
ing methods of this sort. Many, indeed, consider their 
material as only so much raw stock whose cost ceases 



_ FIRST AND FINAL COST _ S3 

the moment it is unloaded on the ground and paid for. 
Most managers consider the purchasing department effi- 
cient when a comparison of the prices paid with the 
market quotations shows that their stock has been pur- 
chased at or below the market price. Few take the 
vital step of analyzing their purchases from the view- 
point of final which is the only true economy. 

Many factories now have an "engineer of material" 
whose duty it is to act as a mediator between the shop 
and the purchasing department in cases of this sort. 
He ascertains by actual test the suitability of all mate- 
rials proposed and prepares specifications to guide the 
purchasing department. 



connection between the purchasing department 
V_/ and the shop if essential for right quality how the 
"engineer of material' acts as an arbitrator. 

In one establishment employing an "engineer of ma- 
terial," the arrangement works out as follows: When- 
ever the designing department produces a new design 
calling for a new kind of material, it refers the matter 
to the "engineer of material." The latter consults his 
records. If he has no information on hand covering the 
kind of material needed, he takes up the matter with 
the purchasing department This department then 
writes to different producers of the material in question 
requesting samples and prices. The engineer makes the 
tests which he deems necessary and eliminates at once 
those samples which are defective. The rest of the 
samples are then given a try-out in the shop. Those 
only which stand this test are considered for purchase. 
Sometimes the purchasing clerk buys the cheapest ; 
again, he may buy upon the basis of iMivT.v. Or, if 
doubtful about any of the firms he is dealing with, he 



34 HOW TO BUY 



may place a small trial order with a number of them 
and base his final order upon the showing, not of the 
sample, but of the trial order. Material good in sam- 
ples sometimes falls far short in quantity orders. 

Not infrequently shop prejudices hold back the buyer 
from effecting economies in his purchases. Foremen may 
strongly favor certain supplies, particularly such things 
as tool steel or oils and paints. Growing accustomed to 
one kind, learning to handle it in a certain way, they 
become convinced it is the one brand that is suited to 
their line of work, although there may be dozens on the 
market that, with a little change in method, could be 
adapted to their purposes with great saving. Again, 
the favoritism may be due to unionism. The favorite 
brand bears the union label; the proposed does not. 
There are a score-and-one other reasons, fancied or real, 
for combating a change. 

The manager or owner himself may stand in the way 
of wise buying. A very large concern bought all of its 
coal thousands of tons annually of one local dealer, 
who, outside of business, was a great friend of both the 
manager and the owner. The owner himself placed this 
contract regularly, without question, taking his friend's 
word for both price and quality. 

But there came a time when purchasing in his firm 
was put on a scientific basis; material was bought on 
specification; an "engineer of material" was given au- 
thority over these matters, and the placing of contracts 
even by the president was checked. The coal, supposed 
to be all right, was found on test to be very inferior. 
Samples were secured from other dealers, tested and 
compared, and it was found that, on the heat unit basis, 
the favorite brand was the least efficient. 

The value and function of the material engineer is 



FIRST AND FINAL COST 85 

plainly evident in all these cases. He dictates purchases 
on the basis of careful, unbiased, often technical inspec- 
tion. Moreover, not having worked in the shop, his 
judgment is not warped by the natural inertia of the 
shop man to change. Finally, he has the necessary prac- 
tical and technical knowledge and experience, and the 
broad viewpoint on the problem necessary to dictate 
purchases to the best advantage and to know for a cer- 
tainty that material purchased is not only right in 
quality and cheapest in final cost, but is receiving a 
square deal in the shop. He does not look at final costs 
through the obscured goggles of first cost, but views 
each first cost through the clear glass of final cost. 



T)EPEND ABLE quality as well as service it expected by the 
*^ factory purchaser. One of the first question* the buyer 
asks is, "What service can I exptctf" and the answer that 
the manufacturer girts mutt be based primarily upon his 
knowledge of what is in his raw materials. Unless the 
manufacturer knows just what requirements his raw material 
will meet, he can not say with confidence what service kit 
product will five. 

T. K. P. H*ine 



Ill 

WHEN THE SALESMAN 
DROPS IN 

By Carroll D. Murphy 

HE salesman that shop and field-trained defender 
I of samples against the daily pessimism of buyers 
is a "traveling directory" of all that pertains to selling. 
And what touches selling touches buying. 

In sharing his knowledge with the buyer, however, 
the salesman naturally hammers the spots in his goods 
that ring true and taps gingerly on other features. 
Therefore the successful buyer sitting in judgment on all 
the lines offered, forced to consider salability and serv- 
iceability above personal claims, must use every idea that 
comes and dig for others. He must have no ear for flat- 
tery and "rush" talk. He must remember that till he 
has signed, he has the advantage and can use his own 
judgment despite the salesman's hypnotism. He will 
test every opinion, catch at only the real pointers of- 
fered, and complete the goods comparisons of which each 
seller gives his own partial view. 

The first step in learning from a salesman is to learn 
the man himself. Some men are born judges of human 
nature, but any buyer can measurably develop this fac- 
ulty. To study a man's face and eyes, his voice and 
actions; to get specific statements and put them on 
cards awaiting proof or denial, are some of the ways 
which in a few weeks tell a buyer what sellers are accu- 



POINTS FROM SALESMEN 37 

rate, business-like and square. Sales stories that leave 
the haphazard listener confused bring interesting facts 
to the buyer who tabulates the talk. Try to repeat your 
own story and you will see how six versions of a buying 
proposition serve as counter-checks on accuracy. More- 
over, in casual conversation, character quickly shows. 
The buyer cannot afford to neglect acquaintance with 
his selling friends. Frequently, he can also supplement 
personal judgment with simple tests of the seller a 
strategic short cut to knowledge. 

O ALESMEN possess a mine of valuable information 
O about the goods they carry how the tactful buyer 
draws on this to supplement hit own knowledge. 

It was a salesman who recently instanced this fact. 
He had handled stiff hats for a decade and was now put- 
ting his savings into a haberdashery in his native town. 
Through his road experience he had become an expert 
in hats. In some other lines, however, he was like a cow- 
puncher in a locomotive cab. 

A salesman appeared one morning and opened with 
his tactics in a masterly way. His jobbing house was 
well located to handle the haberdasher's trade and the 
latter saw that his relations with the salesman might be 
constant. The traveler had an extraordinary fund of 
information, but it meant nothing until the buyer knew 
once for all how to rate it till he knew how accurate his 
man was. 

"How long have you been handling your lines?" the 
store man inquired. 

"About eight years, most of them." 

"You ought to know the goods." 

"I've taken considerable pains to," the salesman ad- 
mitted. 



38 HOW TO BUY 



"You know hats?" the buyer insisted. The salesman 
smiled. 

"Well, you say you've got a line there that I can't 
beat. In the back of the store are samples at the same 
price from three other houses, and I'm not sure but they 
beat yours. We'll shuffle the bunch and each pick the 
best hat without looking at a label." 

"If you've got a better bargain than this first one I 
offered, I'll recommend it," agreed the salesman. 

The buyer arranged the test, slipping in two higher 
grade samples. 

"Well," the salesman laughed, after an instant's ex- 
amination, "here's the best; that's next both better 
than mine. If either quality comes at my figure, take 
it. I don't believe they do." 

"How do you judge?" inquired the haberdasher 
naively. In two crisp paragraphs, the salesman sketched 
the ideal hat after the buyer's own heart. 

"As it happens," the haberdasher rejoined, "I know 
hats too. But I couldn't swear whether linens and 
leather are vegetable or mineral. 

"You've proved that you know goods and have faith 
to walk yours on their own legs. What do I look for in 
linens?" 

The salesman saw a chance to score by fairness and 
jumped at it. He understood that a buyer who de- 
manded concrete information would eventually get it and 
test it against deliveries. Misrepresentation dropped be- 
low par. 

At one stroke the buyer had proved the salesman's 
knowledge, warned him against whitewashing, put him 
upon his honor and established a basis of mutual respect. 
Information is now freely exchanged between the two 
and every idea stands test. 



POINTS FROM SALESMEN 89 

The wise buyer primes himself for his sales interviews 
by reading and study. He keeps samples at hand. He 
learns enough to question keenly and to press for exact 
points needed to fill his data sheet. 

KNOWING nothing about a certain line of good* he 
withed to carry, one buyer tecured a matt of in/or, 
motion by tactfully questioning talesmen who called. 

How to test goods, distinguish grades, figure costs, 
recognize values; how to choose profitable fashions and 
base quantities on sales elsewhere ; these are points which 
the traveler understands but may wish to keep dark. 
Weight, for example, is often telltale in fixing the cost 
of stoves, farm machinery, brass fixtures and even un- 
copyrighted books. The buyer who finds salesmen mak- 
ing these quick tests displaying this sleight-of-hand 
meets the exhibition with a keen eye and the pointed 
query, "How do you know!" 

One clever buyer started from black ignorance and 
by playing the chief talking points of three salesmen 
against each other, shortly gained a fair knowledge of 
plated silverware. To the first salesman the buyer 
merely named a make of goods. The salesman laughed. 

"Why, our spoons will strip a third more silver than 
that brand," he replied. 

"Well," said the second salesman an hour later, "the 
designs we handle include all the big sellers." 

"What about metal how much silver will your No. 
3 spoon strip?" inquired the buyer confidentially. AncJ 
straightway the seller took on greater deference and 
talked more technically to this buyer evidently so ex. 
pert in knowledge. 

"You see," he concluded, "our metal is placed to 
catch the wear under the bowl and at the toe of the 



40 HOW TO BUY 



spoon. This adds years to its service. ' ' 

"I see," said the buyer; and twenty minutes later he 
was talking expertly of patterns, stripping and the 
placing of the metal to a third salesman who had boasted 
that the backing of his ware was neither too soft nor too 
brittle, but a stiff steel core, perfectly adapted to its 
purpose. 

The buyer does not need to take a long step or pre- 
tend any thorough knowledge in this work. He can con- 
jure marvelously with the formula, "What about ?" 

if only he knows a few catch phrases of the trade to fill 
in the dash. In consequence, every salesman strains to 
meet competitive talking points which he might other- 
wise gloss over and all treat the buyer as a man who 
understands the product. 

Novelty samples in a salesman's display stir a swarm 
of questions along a different line. There is a young 
college man in a Massachusetts store who turns his back 
to the light, faces his visitor and artfully leads out along 
these lines: 

"What are my competitors doing with this contriv- 
ance?" 

"How has it acted at the centers where it first went 
on sale?" 

"What flaws has it developed?" 

"How wide and how permanent is its appeal?" 

' ' To what extent is it advertised and how much of the 
advertising that I pay for would I get?" 

"What competition has it, and how do you meet the 
talk of competing lines?" 

"What likelihood has it of going out-of-date?" 

"Can you keep me supplied with it?" 

"What are the best things I can tell people about it?" 

"What are the latest ideas on displaying it?" 



POINTS FROM SALESMEN 41 

The buyer must count forces, nicely adjust his strategy 
to his opponent's personality and meet aggressiveness 
with foresight Often the salesman gives out the de- 
sir, d points freely. Frequently his good nature sweeps 
him off his feet if you naively take his aid for granted. 
Samples laid before him may bring a whistle, a smile 
or a word that means much to one who knows the man. 
With novelties, it may be possible squarely to let the 
seller know he can place no innovation without vouching 
for it somehow. Again, finesse is needed. Follow the 
salesman 's own example ; come at him from his own side. 
Learn of his work, his interests, his territory. Set him 
to talking of himself and the conversation will drift to 
what interests you. 

Fortunately, not all buying and selling is conversa- 
tional sword play. Growing buyers and clever salesmen 
alike are alive to selling schemes. The small purchaser, 
who rarely gets to market centers, should especially en- 
courage discussion along this line. He should tour the 
shops in his salesman's person and ask for opinions 
on displays and sales; should persuade the seller to 
watch for adaptable ideas and should show appreciation 
of every help. 

Nowhere are wholesale and retail interest nearer unity 
that here. The salesman finds the same dusty wares in 
the window, the same shelves strewn with red calicoes 
and blue silks, as on his last trip. 

"No sales for me," his mind registers automatically. 
And then he offers some suggestion, which the wise 
buyer will receive tactfully, however crudely it may be 
put 

But the chances are it will be the most diplomatic, the 
most alluring description of a clever window at Mis- 
soula or Cairo or Wilkesbarre "so simple, so easy to 



42 HOW TO BUY 



brush up every morning ' ' with a new, clean touch. Or 
it may be that "snappy bargain scheme down the line" 
which clears depreciating stocks; that week-end sale 
which built business for a shop-keeper who was almost 
bankrupt ; the idea Sandman has for livening his store 's 
"insides" every week any one of a hundred sales win- 
ners in six states. 

/COOPERATION between buyer and salesman results 
V-/ profitably for both clever selling schemes and valu- 
able assistance can be secured from the latter. 

No storeman who meets travelers has any excuse for 
nursing last year's wares. It is too easy to get red- 
blooded schemes ; to draw on the ' ' traveling directory ; ' ' 
to learn the most important point of goods knowledge 
how to clear them at a profit. 

In many cases the expert factory purchaser com- 
pletely outclasses salesmen on goods knowledge. But in 
the unbelievable variety of things which he buys, some 
are sure to be unfamiliar to him. 

A Chicago purchasing agent who for years worked in 
the steel mills and who now belongs with an office appli- 
ance firm, illustrated this point. One important item of 
raw material, which till recently he bought, was strip 
steel of very high grade and accurate thickness. So 
exacting are the requirements that the firm willingly 
paid fifty cents a pound for the material. Still, how- 
ever, the metal failed to bend smoothly and seemed un- 
satisfactory. 

Finally the buyer telephoned a steel company which he 
had noted as good on specials and explained his trouble. 
The sales manager sent out a salesman perfectly con- 
versant with such grades of metal. 

The purchasing agent was able to explain precisely 



POINTS FROM SALESMEN 48 

what he liked and disliked about his material. The 
salesman came back instantly with a list of the grades 
available and a minute description of their character- 
istics under various tests. A thirty-five cent steel was 
shortly fixed on for trial. It proved entirely fit and 
has netted a handsome profit. 

From another buyer's own press rooms complaints be- 
gan to come that a certain purchase of paper gave trouble 
with electricity with shrinkage between printings on a 
three-color run with edges not squared, which could 
not be fed straight. 

The buyer lacked knowledge on these fine points, but 
in thirty minutes he had brought to his desk a paper 
salesman who had mastered such situations a dozen times. 
An hour later the presses were rumbling regularly again 
and the salesman was back on his beat, grateful for the 
chance to square himself and the purchasing agent with 
the latter *s firm. 

These purchasing agents draw on the expert advice 
available as freely as they would turn to a banker 
or lawyer at need. Their knowledge is sufficient that 
they can reach the right source of information and 
so get at the definite "points of law" under fire. There- 
upon it is easy to build increased goods knowledge and 
better buying power both permanent investments. 



buyer' i tatk it to know kit demand, to know the 
tourcet of tupply, to keep track of new good*, and get 
the bett price*. He mutt cultirate kit powert of discrimina- 
tion; hit tatk it to choote carefully ana ttparale the pottible 
from the impotnble, the tafefrom the unsafe. 

Franklin A. Stole 



IV 

WHEN THE BUYER GOES 
TO MARKET 

By Neil M. Clark 

THE general manager of a big department store 
stopped approvingly before a counter containing 
a new kind of blouse which had proved immensely 
popular. 

"How did you happen to get hold of this style before 
everybody else?" he asked the department buyer. 

"I keep a card file," said the buyer frankly, "of 
every manufacturer and jobber I have ever bought 
from, and when I go to market I visit every- 
body on my list, big and little dealers alike. The 
man I bought those blouses from hadn 't sold us a bill of 
goods for six years. His salesmen had stopped calling 
on me, because he had turned his efforts more or less into 
the middle West. Nevertheless, I have dropped in at 
his sample rooms on every one of my New York trips, 
and the last time he had those blouses. I felt that they 
were going to make a hit and so gave him an order." 

Records such as this buyer keeps are invaluable to 
every man who visits his markets. Nothing is more 
dangerous for the man who must keep an up-to-date 
stock on his shelves, as every live retailer must, than to 
give up investigating general market conditions. Scant 
looking, or taking the word of one salesman that such 
and such is "the very snappiest and most up-to-date" 



PLACING THE ORDER 45 

may lead you to overlook a really worth while article 
which some out-of-the-way seller is carrying. 

A big department store in the East requires each buyer 
to have a card file of all the possible sources of supply 
in the larger cities which are visited on the quarterly or 
semi-annual buying trips. 

SOURCES of pottible tupply mutt all be known to 
the up-to-date buyer failure to ritit a tingle dealer 
may mean the lott of a profitable telling line. 

The buyer himself is a man who has received careful 
training at the hands of an experienced man. He has 
accompanied the latter as an assistant on several trips, 
has studied thoroughly the goods in his department and 
the methods of their manufacture. He has sold the 
goods on the floor and knows by actual contact with the 
public just about what his class of customers will buy. 
When he goes to market he is fortified with his list of 
sellers; he knows, also, the maximum amount he can 
spend, as well as the manner in which he must divide his 
purchases among different classes of articles. At mar- 
ket his big problem is to find the right seller the man 
who has the right quality at the right price. If there 
are several such, choice lies with the man who is known 
to deliver goods promptly on the contract date, and live 
up to every word of his agreements. 

The first thing the shrewd buyer does is to visit the 
retail stores which sell his line of goods. He does this 
to find out what they are offering. These visits are con- 
ducted systematically, and the buyer proceeds from the 
dealers who carry strictly high priced articles to the 
cheap stores, and back from them to the middle class 
stores. His purpose in so doing is to find the newest 
kink in fashions. The aim which the dealer in high 



46 HOW TO BUY 



priced goods has always before him is to sell the new 
thing while it is new, before it has been seized upon 
by the medium-priced or cheap manufacturers and 
placed in every store in the country. The eye of the 
experienced buyer is quick to catch the latest trend of 
styles in the articles lying on the up-to-the-minute deal- 
er's counters. 

When he knows where the fashions tend, by studying 
the stocks displayed in the high priced shops, the buyer 
visits the cheapest stores. Here he corrects his first 
impressions or corroborates them. He also tries to learn 
whether the late fashions can be duplicated in cheaper 
materials. If so, he may prefer to buy the cheaper qual- 
ity, especially if his trade happens to be not the most 
exclusive. Again, he may be unable to find the right 
article in the cheap store, but is able to locate it in the 
medium-priced shop. 

This policy of seeing what his neighbors are selling 
is invaluable for every storekeeper. It freshens his 
sense and gives him new ideas adaptable to his own 
business. 

"I buy exclusively from salesmen," said the manager 
of a jewelry store, "but we visit the market several 
times every year. I have just returned from a two 
weeks' trip with one of my assistants. It was essen- 
tially a buying trip, but we did not place an order for 
a single article and had no intention of doing so when 
we left. We went to see what other big jewelry firms 
are doing, what new patterns the manufacturers are 
bringing out, what ideas we could pick up by the way. 
I know it paid." 

In the crowd of salesmen who beset the buyer when 
he arrives at the market, the unwary man is liable to 
become confused and load himself up with stock which 



PLACING THE ORDER 



47 



he can not hope to move at a fair figure. 

One Texas buyer who goes to market regularly never 
attempts to place his orders until he has returned to his 
own office. He looks at the offerings of every supplier, 
tramps mile after mile through different sample rooms 
and spends days in his shirt sleeves listing as the sales- 
men read and describe all of their goods which he 
thinks he may be able to use. When he finally returns 
home he has a mass of carefully arranged information, 
and in the quiet of his office he compares the qualities 
and prices offered by various houses. Here he can use 
his sober best judgment to select the articles which meet 



NAM 


' 














< . 
JMCHASC* 


AMT. 


AMT.9 LI 
AT MARK 






DELIVERY RECORD 


AMT. 


DCSCRIPTION 


OLD 


DOWNS 
















































OUA ypafltf* YSim 






































































RCMARKS 













































FORM J: The buyer' t "lift of resources" it kept in a little file on cards 

similar to this. Each teller'* previous record u thus brought Jorcffuliy 

to the buyer's attention 

his needs ; can make contracts, place initial orders and re- 
order as needed, with no fear of passing the limit which 
he has set for his expenditures. This buying method 
is the key to right prices, np-to-now popularity, small 
stocks and quick turnovers in chain store success. 



48 HOW TO BUY 



All the information in regard to suppliers which the 
buyer requires is conveniently given on Form I. Here, 
in compact shape, he has a summary of all previous 
transactions with each supplier; he knows by glancing 
at the brief notations what the character of each is in 
regard to service quality tests and delivery records 
are his invaluable guides ; and his ' ' resource card ' ' tells 
him also whether the manufacturer is capable of han- 
dling a big order or rush re-orders promptly. In other 
words, he runs no danger of placing a five thousand dol- 
lar special order for delivery in ten days, with the 
optimistic man who is ready to oversell a factory so small 
that he could not turn out such an amount of goods in 
less than a month. 

OELECTING the right supplier means having a com- 
^-Jplete record of past transactions with all firms 
how quality and delivery overshadow first cost. 

The buyer does not conceal from the seller the fact 
that he is keeping this tab on him. As a matter of fact, 
he freely discusses past purchases and shows where he 
gained or lost. Goods that once failed to move ex- 
cept at reduced prices are a black mark against both 
buyer and seller. The aim of the buyer is to educate 
manufacturers and jobbers into an attitude where they 
are not only willing to give first class service, but are 
glad and even eager to see that the retailer gets the best 
there is in quality at the right price. Obviously, the 
best thing in the market that is, the most suitable for 
the purpose is the most economical, regardless of the 
price. This is a hard fact to realize, if you have always 
bought for bargains, rather than to suit your customers. 
You must know values, and recognize when price and 
quality are both right to re-sell at a profit. 



PLACING THE ORDER 49 

Shrewd buyers rarely strive to "beat down" the 
salesman's figure. That kind of man soon establishes 
a reputation among travelers, and the price which they 
give him first is always scaled up to a point which will 
enable them to come down to meet the haggling buyer's 
demand. This man's bargains are generally such in 
appearance only. The final price is naturally no lower 
than that given to your competitor across the street, 
who knows his market and sources of supply thoroughly 
and gives salesmen to understand that their first price 
must be rock bottom. If you haggle into a lower price 
it will almost inevitably be at the risk of having some 
undesirable goods palmed off on you, or, since the jobber 
and manufacturer must have reasonable profit, they will 
economize somewhere in the service granted the hard 
buyer. 

"I know my sources of supply thoroughly," said one 
up-to-date retailer. "When a salesman offers me a 
price which I know I can beat by buying from another 
firm, I simply drop the matter. Never do I allow him to 
scale down ; and never do I hold the promise of a lower 
price elsewhere as a club over his head to enable him to 
shade his figure. My experience is that when a salesman 
knows you are a positive buyer and must be given the 
best and lowest figure to secure an order, his best price 
will be given at once." 

Knowing thoroughly all the sources from which he 
can buy and finding among these sellers the one man 
who combines excellent service with a fair price that 
is the big problem remaining for the buyer after decid- 
ing what quality of goods to get. At no place in the 
purchasing organization does real initiative count so 
much as in the buying department The strong buyer 
will not let himself be induced by the salesman to buy 



50 HOW TO BUY 



a line of goods which he would have difficulty in selling. 
On the other hand, he will not be afraid to take a bold 
step if his instinct and experience tell him that it is 
wise. The initial art in retailing, buying is really the 
foundation on which rests the entire success of the 
store. 



"C'VERY buyer has att manner of temptations thrown in 
*~* his path. He is invited to dine, to the theatre, to drink, 
smoke, drive, at the expense of those who wish to sell him 
goods. He is given a chance to make a few dollars on the 
side. He is always in line to receive presents sent out to 
his house or his hotel. He is the subject of keenest study by 
those who sell. They size him up, AtoZ. If he has a weak 
spot they will find it. And if he has not a powerful per- 
sonality, his weak spot vnll show in his selections. He will 
Jkn7 to buy what will sell the best, miss it on quality, or price, 
or style, or something that he would not have missed it on if 
his personality had been strong enough to keep the seller 
at a distance and passed upon his purchases solely upon his 
own judgment. 

A. Montgomery Ward 

Founder, Montgomery Ward & Company 



BUYING EQUIPMENT BY 
STANDARD 

By Harry Franklin Porter, M. K. 

THE management of a large plant manufacturing 
railway equipment had occasion a number of years 
ago greatly to increase their manufacturing capacity. 
Large purchases of machinery were of course necessary. 
Requirements were determined and specifications drawn. 
Then makers of machinery along the line required were 
consulted. They sent their representatives to the plant, 
and for several weeks the purchasing agent was busy en- 
tertaining their propositions. When conditions war- 
ranted it, a trial order was placed with several different 
houses for one machine each. The trial machines were 
installed in the regular machine shop, no other space 
being available, and a separate motor attached to each. 
The regular class of work was then performed on each 
machine and identical tools of the same quality as would 
be used in regular manufacture used in each case. 

About three days' test was run, when the results 
obtained were tabulated and the power consumed 
charted. It was then a simple matter to determine who 
was entitled to the quantity order. The balance of the 
machines were of course required to be equal to the 
sample. If any of the other machines also came up to 
the specification as originally drawn up, they were ac- 
cepted ; otherwise they were returned. The specifications 



52 HOW TO BUY 



were then altered to conform with the results of the 
test for the future guidance of the purchasing depart- 
ment. 

To insure that all of the representatives were con- 
vinced of the fairness of the tests, they were privileged 
to attend them and make what suggestions they would. 
If any required a better grade of workman, however, 
than the one furnished for the test, he was ruled out. 

Some fifty to seventy-five various sized drill presses 
were bought in this way. In the case of the heavier 
machines, it was not always possible to use this method, 
but then samples of the work were submitted to the dif- 
ferent makers and orders placed upon the basis of the 
records returned of the quality and quantity perform- 
ances. Machines bought in this way were required when 
installed to fulfill all promises in this respect before they 
were finally accepted. 

STANDARDS and tests are the means used by modern 
concerns to secure the right equipment the lowest 
first price machine may be highest in final cost. 

This was the method one management followed in ob- 
taining tangible data upon which to base their purchases 
of equipment. Other progressive manufacturers handle 
this problem similarly. Such manufacturers have the 
scientific angle on buying they see that they get value 
received for their money in the light of all factors in- 
volved, among which usually lowest first cost is not the 
first but the last consideration, subordinate to quality 
and service. The points they consider in buying equip- 
ment are tabulated in Figure VI. 

All manufacturers, small as well as large, may take 
this same angle on the purchase of equipment and appli- 
ances, as every progressive manufacturer, small and 



STANDARDIZING PURCHASES 



53 



r 
OUTPUT 


IOW TO JUDGE MACHINE "POINTS" 


QUANTITY 
OUALITV 

riNST COST 
MATERIAL COST 

LABOR COST 

POWCR COST 
MAINTCNANCC 

OCMUCIATION 
PACK COST 

"rccoiNO COST 

TOTAL COST 

rLCIIIILITV 
ADAPTABILITY 
SALANCC 

DMIVC 

LABOR CCONOMT 

ACCIOCNT 


_ M0r MUCH CAN IT DO' 
_ OMAT KINO Or 0* WILL IT OOt 

_is LOwcsT riRST COST A RCAL INOUCCMCNTT 


M 


1 




IN TMC OUTPUT* 




POWCR COST PCR UNIT or OUTPUT* 


' 


A8LC1 




SOLCTC IN A rCW TCAR*. CNTAIklNO A MCAvr OCPRC 
CIATION CMAMOCT 
__ IT COMPACT IN WOP.HINO ROOM. TMUS RCOUlDIN 


1 






C 




"~ 






r 

1C 

OR 


TS 


Or OUTPUT! 




1 


_OOC IT riT INTO TMC ACNCMAL rACTOMT PUkN. OR 




SAFETY 


INOt OOCS IT kOOK AS ir 1 T COULD STAND TMC PACC1 
_! IT RIOOCO UP rOR OIRCCT MOTOR ORIVC1 CAN IT SC 








ecsiom 

COUIO RUSS4N* OR STRIRINtt PAJITS CAU*C MCATIN6 
AMD PARKIN* ANO SO START riRC' 



FIGURE VI: The machine vfiich tatitfiet the* criterion* of judgment 

matt nearly it the machine it will probably pay you to buy, even though in 

frit oott it may be the highett of aU considered 



54 HOW TO BUY 



large, has long since done with respect to material pur- 
chases. No progressive manufacturer, at the present 
stage of industrial development, takes any chances with 
his glue, or varnish, or enamel, or paint, or wood, or 
coal, or what not. The day of experimentation is passed. 
Manufacturers now buy their material on the basis of 
exact knowledge not because of somebody's say-so or 
because some friend is the local agent, or some other man 
uses it, or on the ofttimes very misleading basis of 
lowest first cost. The wise furniture manufacturer, for 
instance, no longer buys nine-cent glue; he has found 
that thirteen cent glue goes farther and holds better. If 
higher in first cost, in final cost it is vastly cheaper. 
Moreover, it saves him no end of trouble in his factory 
and dissatisfaction on the part of his trade, the money 
value of which he can measure only indirectly. And to 
insure that he is getting the best quality glue on the 
market for his money and that the quality of the brand 
he has once found the best does not subsequently de- 
teriorate, he maintains a laboratory, in charge of a com- 
petent chemist, wherein not only glue but other ma- 
terials of manufacture and fuel are systematically tested. 
This, with an up-to-date cost system, which gives real 
costs shows what material works up to the best ad- 
vantage and with the least waste enables him to pur- 
chase on the basis of true economy. 

So he buys dimension lumber for as many purposes 
as he can because he has figured it out that, taking into 
consideration the elimination of waste which sometimes 
runs as high as forty per cent in ordinary lumber and 
the reduced number of operations necessary to working 
up dimension stock, he saves on freight, handling, kiln 
drying, and overhead on the operations necessary far 
more than the difference in the first cost. His cost sys- 



STANDARDIZING PURCHASES 55 

tern if it gets at vital factors will show that to him. 

Just as materials are now bought by standards so the 
progressive manufacturer is buying equipment. What 
the other man says does not guide his choice. Shop tra- 
ditions and low first cost are losing ground as determin- 
ing factors in purchasing. Large manufacturers are es- 
tablishing testing departments, and smaller factories are 
making use of a common testing department, the com- 
nicrual laboratory; for standards are economical. One 
company has a department for standardizing standards. 

Suppose a manufacturer is in the market for motors. 
He has decided to replace belt drive with individual 
motor drive. He knows about what horsepower his ma- 
chines require under the old conditions. He sends his 
specifications to various motor manufacturers. One tells 
him a fifty horsepower motor is what he wants. Another 
states that at least a hundred horsepower motor will be 
necessary. How is he to know which is right, or the 
nearer soT He buys the fifty horsepower motor on the 
confident assurance of the salesman. He finds that it is 
too weak and throws it out. He may be so disgusted 
by his experience that he goes back to his old drive and 
so perhaps for years suffers along under the old, handi- 
capping conditions. I once knew a concrete contractor 
who allowed himself to be persuaded that an electric 
hoist was the thing he wanted. So, lacking complete 
knowledge, he bought and installed the hoist recom- 
mended. It cost him about seventy dollars for connect- 
ing it up. It worked very poorly from the start, hoisted 
the concrete bucket painfully slow. 

He put up with it for a few days, while the salesman 
had his man puttering away "trying to see what was the 
matter." Then, results not forthcoming, he threw it 
out and put in his old steam hoist in which he had every 



56 HOW TO BUY 



confidence, because he knew what it would do. It cost 
him a lot of money but it would have cost him much 
more if he had attempted to struggle on with the under- 
powered motor. If the subject of motor hoists is 
broached to him now, he has no patience with the idea 
or with the possibilities of this type of drive. Yet, 
motor hoists properly powered are admitted to be far 
superior and more economical than the old steam hoist. 
If the salesman who sold the machine and the contractor 
had worked on a more definite knowledge of just what 
the machine could do, an under-powered motor would 
not have been installed. 

HAPHAZARD purchases result in big wastes 
scientific buyers test and standardize, and aim always 
to find the "one best" machine for their purpose. 

It is this lack of real knowledge of what the buyer 
has and what the seller wants that is responsible for 
much waste in equipment buying. Lack of standards 
has much to do with "hazy" specifications. But if the 
buyer actually analyzes the ' ' points " of a piece of equip- 
ment in its relation to his work, he will buy intelligently. 

Many manufacturers still go about the solution of 
their mechanical problems in haphazard fashion; how- 
ever, they experiment with this and that make or type 
of machine or tool, under actual working conditions, 
until the workshop resembles not a symmetrical, well 
balanced, carefully co-ordinated, and standardized affair 
in its equipment, but a veritable mechanical museum. 

A concern that was forced to undergo reorganization 
a couple of years ago was found to have on hand over 
fifty thousand dollars' worth of unsuitable equipment. 
Laxity in purchasing was responsible and reorganization 
was the natural sequence. 



STANDARDIZING PURCHASES 57 

The manufacturer who has the scientific angle on this 
phase of his business, as well as on the other phases of 
it, goes about the selection of each piece of equipment 
as carefully as he would his razor or a fine suit of 
clothes. He sees to it that each machine is the one best 
machine for the purpose, and if several machines are 
needed for the same purpose, that they are identical in 
every respect, so that they will pull together, any one 
be able to do the work of any other at any time, and 
that their repair parts are interchangeable, requiring 
only one extra set, instead of six or a dozen separate and 
distinct sets. He also sees to it that the machines are 
designed so that motor drives may be fitted directly to 
them, in case he happens at the time still to be using 
belt drive. And he is careful that every machine is 
properly safeguarded. He will not make the mistake 
of the man in Wisconsin who bought an unguarded 
woodworking machine when he was urged to buy a 
guarded one, because he saved a few dollars on the first 
cost thereby, but was compelled a couple of years later 
by state statute to equip all his machines with safety 
appliances at a considerable expense. In the meantime 
this man had a damage suit over the loss of a finger on 
this very machine, which cost him more than a hundred 
safety appliances. Nor will he make the mistake of 
another woodworker who paid no attention to taking 
away the sawdust from his machines, until again the law 
compelled him to. He will see that each machine he 
buya or builds is designed with this particular end in 
view, not because the law may require dust less opera- 
tion, but because he knows it pays in more than one way 
so to operate. Experience has taught him that. 

Nor does he buy equipment which does not take into 
consideration greatest economy of labor in operation 



58 HOW TO BUY 



the least lost motion and fatiguing movements on the 
part of the operators. Too many machines have been 
built which utterly neglect this point of view. They 
require the operator to lean over in an uncomfortable 
position, to do without sufficient light, or to move from 
one side to another in operating, or reach high or stretch 
wide to turn on or off the power, when he might do so 
with his foot, or to use the awkward hand, or to work 
with a fixed speed when a variable one would be a very 
great advantage, and so on. The scientifically designed 
and built machine has had all these things taken into 
consideration. It can be operated as easily and with as 
little labor, as a motor car everything is within easy 
reach, both hands and feet made use of, and a com- 
fortable posture in working foreseen above all. Progress- 
ive manufacturers are designing and buying machines in 
which these details are thought out. 

The relation of the machine to the product it makes 
must be considered. One manager who bought an auto- 
matic machine because he had read it was the thing, 
discovered after he bought it, that before it would show 
any economies over the old method he would have to 
triple his business. Another man bought an automatic 
to work on such heavy stock, that when he came to 
figure out his actual costs, he found the waste ex- 
ceeded the saving on labor. He failed to take into ac- 
count that, because volume increases as the square of the 
diameter, beyond a certain point the economy of auto- 
matics is largely offset by the greater percentage of 
waste, and that some other process involving less waste 
forging or casting would be cheaper. Automatic 
machines often key tip the output of a whole depart- 
ment. This is one of their decided advantages. 

One foundryman installed, without a careful reckon- 



STANDARDIZING PURCHASES 69 

ing, an expensive equipment for mechanical molding. 
He was carried away by the fact that with this equip- 
ment he could get out practically as many castings in 
the same time with the same complement of men and in 
half the floor space as by hand. But he failed to give 
due consideration to the interest and upkeep charges, 
which proved very heavy, so that when later he installed 
a cost system which showed up to him the real cost, he 
found that the labor and space saving was more than 
offset by the heavy overhead, and that before he could 
begin to realize any marked economies it would be neces- 
sary to operate his plant continuously, day and night. 
It was not so much the fault of the machine as his 
methods. 

So the investment of money in equipment is a matter 
for most careful determination. A great many things 
need to be taken into consideration. There must be 
exact knowledge about every detail. It must be proved 
beforehand that the purchase is going to be a wise one. 
And until purchasing of equipment is put on this basis, 
it will remain more or less a gamble. 



COME ttaret carry twice the itock they thmdd. I can put 
^ my finger on merchantt who haw good* that have been 
on their thelvet fix or eight yeart. And vhen they inietted 
tome of their earning* in thi* dock, they credited Profit and 
Lot* with what they contidered net. Thit it the tort of 
policy that innate* a bunnet* like a balloon. It may look 
like a tolid, dependable matt, when in reality it it largely 
gat. Thete merchantt limply deceit* themtebet by thit 
policy. 

Benjamin F. DeMutb 

FoowlOT. DMuth * CoapMr 



VI 

HOW TO AVOID PITFALLS 
IN BUYING 

By Fred Cook 

HHHE merchandise manager of an eastern department 
JL store, when visiting other stores or when with sales- 
men and buyers of other houses, is always much more 
keen to learn the mistakes that others have made so that 
he may avoid them, than to learn the successful buying 
ideas of others that might be adaptable to his methods. 
He maintains that this policy is profitable because he 
does not want to get the habit of looking to others for 
excellent ideas. He says that knowledge of the mistakes 
of others enables him to strike out from the "beaten 
path" with a greater degree of safety, while his lack of 
the knowledge of the successful methods used by others 
gives his vein of originality a clearer field. He gives 
cautious originality the "blue ribbon" as a business- 
building factor, while imitation, he says, never fails to 
draw the "booby" prize. 

This man makes mistakes, but he qualifies the fre- 
quently expressed thought, that it is excusable to make 
a mistake once, with the idea that it is not so excusable 
when the same mistake has already been made by others. 
His revised statement of the idea is this: "It's often 
excusable to make an original mistake once." 

This seems to express a good slogan for buyers in 
general, because buying is such a personal, i 



PITFALLS TO AVOID 61 

process and has such basic responsibility in building a 
business, especially retail, that here originality is at a 
premium. Many buyers would not consider some of the 
following anecdotes to be in the "excusable" class of 
mistakes, as defined by the merchandise manager just 
quoted, yet their mistakes illustrate violations of some 
of the cardinal principles of good buying. 

BUYING to suit personal taste* instead of trying to 
suit customer wan/4 was a stumbling block in the tray 
of a dealer in crockery and fancy goods. 

"The greatest mistake of my business career," said 
a dealer in crockery and fancy goods, "was made on 
the buying end. In selecting my opening stock I went 
entirely by my own personal tastes, buying goods to 
sell the same as I should buy goods for my own use. I 
thought that was quite a wise buying policy, never real- 
izing that other people's tastes might be different, until 
I tried to sell the goods. Let me illustrate with a spe- 
cific instance: 

"The salesman and I were looking over a line of 
tumblers when he handed me a green and gold one 
with the remark, 'Here's one of our best sellers; pretty 
nifty, eh?' I didn't think so. Altogether too flashy. 
Personal taste, you see. No consideration whatever for 
the fact that fully one-half of my customers were not so 
conservative in their tastes. 

"I didn't buy that tumbler and I turned down most 
of the suggestions this salesman gave me. All through 
the line I selected modest colorings and sober hues and 
congratulated myself that I had a finely assorted stock 
of high grade goods. 

"The first week's sales showed up my ignorance of 
the public's taste. Time and again my clerks came to 



62 HOW TO BUY 

me with the information that one customer would like a 
berry dish with a heavy gold band, and another customer 
wanted a green plaque ornamented with bright pink 
roses. 

"I was stubborn at first and defended my selections, 
arguing that I was right and the customers wrong; but 
ultimately I tumbled to the truth of the axiom that 
business is not art, and that when buying to sell you 
must keep in mind the varying tastes of your prospects. 
It may offend your aesthetic sensibilities to stock salad 
bowls decorated in purple and yellow, but if your cus- 
tomers want them it's decidedly poor business policy 
not to put them in. 

* ' This same principle applies also to the price of goods. 
Personally I have always been a crank on quality. If I 
buy an article for my own use, I want the best, almost 
regardless of price ; but with more than half of the con- 
suming public, price is the unanswerable argument. 

" So I have learned to stock both cheaper goods than I 
should buy for my own use and goods of patterns and 
styles that offend my taste r because the great buying 
public wants them. I have learned to buy for my cus- 
tomers, not for myself." 

FINDING the kind and style of goods desired by his 
customers was the way a retail clothier succeeded in 
solving his problem of persistent over-stocks. 

Until he tried out a new plan of buying, a retail 
clothier in one of the smaller eastern cities found him- 
self with too large a stock of unsold suits on hand at 
the end of each season. 

To correct this fault in his buying, he devised a plan 
to select his patterns and colors according to his cus- 
tomers' judgments rather than his own. Before placing 



PITFALLS TO AVOID 63 

his orders, he mailed samples of the coming season's 
most attractive styles and weaves in the prevailing 
shades of browns, tans, or grays, with the range of 
prices marked on each. A letter, with a return post- 
card, accompanied the samples and the customer was 
offered a discount of five per cent when he bought his 
suit if he would fill in the number of the sample he pre- 
ferred. 

The returns he received enabled this clothier to deter- 
mine his customers' preferences with much greater ac- 
curacy than in previous seasons. One result was that 
his "leftovers" were reduced by fifty per cent; another 
was that the five per cent discount attracted many new 
customers and turned scores of intermittent buyers into 
"regulars." The greatest advantage of all, however, 
came from the increased efficiency of his stocks. Know- 
ing the approximate measurement of nearly every man 
in town, he was able to select an assortment of sizes 
which more closely corresponded to the requirements 
of the trade. 

/"^HANGING location*, a grocer attempted to carry 
^*s over the line of good* he already knew he quicUy 
learned the difference in customers' vants. 

"In the course of my business career," said a grocer, 
"I have changed locations twice. In making my first 
change I made a serious mistake that I was able to profit 
by when locating the second time. 

"My first business was located in a town of about 
two thousand, and when for various reasons this town 
went flat, I hunted around for a new location. I finally 
decided upon a town of about the same population, which 
was enjoying a large volume of business. Up to the 
time when the first town had started the toboggan act, I 



64 HOW TO BUY 



had done an unusually good business and I flattered 
myself that my methods and my stock were right. 

"When it came time to buy the stock for the new 
town, I looked about and decided that the two places 
seemed identical in size and conditions. I ordered, 
therefore, what was practically a duplicate of my old 
stock, even sticking to the same brands. 

"I hadn't been open many days before I saw my mis- 
take. 'Silver' soda might have been a big seller in my 
town, but here 'Blue Ribbon' had been the favored 
brand for years. You couldn 't give away my pet brand, 
although I knew it was the equal or superior of 'Blue 
Ribbon.' And so it went in many other lines. Of 
course it didn't take me long to see the mistake, but it 
took time to work off the undesirable goods. 

"When, in the course of time, I found an opportunity 
to branch out in still another place, I made it a point to 
visit other grocery stores in the town and carefully note 
the brands they sold. I opened up here with the assur- 
ance that I had what consumers were accustomed to 
buying and I started business with a rush. ' ' 

OVER-STOCKING was a dry goods merchants mis- 
take he now makes out a definite budget, and is 
careful never to overstep the limit he has set for himself. 

"I made one big buying mistake that nearly cost me 
my business, ' ' said a dry goods merchant who now owns 
a large store. 

"In fact, it was really the culmination of a series of 
mistakes, but they were all of exactly the same kind. 
Four times annually I went to market, and bought the 
bulk of the goods I used for the entire year. I was 
never a conservative buyer. There was just a tinge of 
the spendthrift in my blood that crept into my business 



PITFALLS TO AVOID 5 

dealings as well as my personal affairs. When I saw a 
large display of silks and satins, I was tempted to order 
the whole lot. I nearly always ordered more than I 
needed much more than I had originally planned to 
buy. 

"One fall when my shelves were already groaning 
beneath over-stocks, with many of the bills long past due, 
I made the usual trip to market with a determination to 
buy light. I finally decided a certain sum would be my 
limit. 

"When the invoices arrived I was amazed to find that 
they totalled more than double that amount. Before 
long I was almost hopelessly tied up and it was only by 
conducting a big sacrifice sale that I escaped bankruptcy. 
When I got on my feet again I resolved never to buy 
another cent's worth of goods without a memorandum. 

"Since then I have followed that resolve to the letter. 
Before I leave for market, I have a carefully made buy- 
ing budget with limited appropriations for each line. As 
T buy I jot down the quantity and price, and make the 
extension. Frequently I add up the column. When I 
reach the amount of the appropriation, I stop buying. 
If I've overreached myself, I strike out the least neces- 
sary items or cut down quantities. 

"Over-stocks of merchandise have never embarrassed 
me since I learned my lesson." 

l^AILURE to get novdty good* on time lott trad* for a 
r habtrdaihtr how a hurtling competitor taught him 
to rely more on the tactict of the "plunger" 

"My biggest buying mistake," said an old-time haber- 
dasher, "was quite the opposite of most buyers' troubles. 
In fact I made it by trying to steer clear of the common 
mistakes of the plunger. I carried a very complete stock 



66 HOW TO BUY 



of staples but I always shied at the novelties. Even 
when they looked like winners, I was afraid to stock the 
new things which hadn't proved themselves solid with 
the trade. 

"Right across the street was a young fellow who was 
just my opposite in this respect. As soon as anything 
new began to be heralded in the magazines, it would find 
its way to his shelves. More than that, he stocked a 
quantity of high-priced goods stuff that I believed was 
too expensive for our locality. I prophesied an early 
crash and was looking for the sheriff's tag on his doors; 
but somehow these doors were always wide open bright 1 
and early and nearly always a crowd could be seen with- 
in. 'Pretty soon I realized that the youngster was cutting 
heavily into my trade, even getting customers who had 
dealt with me for years. Then I woke up. 

"I stocked the novelties too, and kept them coming 
regularly so that something new of interest would greet 
a customer at every visit to the store, no matter how 
often he came. Results? Well, let me say that there's 
nothing like new stock to stimulate sales. If you 're ever 
tempted to be ultra conservative, remember my case." 

"The quantity bug stung me in my first year's buy- 
ing, ' ' remarked a general merchant who is now doing an 
annual business of about one hundred thousand dollars. 
It was easy to figure and let salesmen figure for me 
that a saving of twenty cents a case on an article 
gave me an extra ten spot, if I should buy fifty cases. 

"So, where I should have been buying dozens, I was 
buying cases, and where I should have bought a single 
case, I was buying five or ten. To protect myself from 
almost sure advances, I would often book up even heavier 
upon the tip of charitable salesmen who were always 
anxious to protect me. But my capital was limited, so 



PITFALLS TO AVOID 67 

that I soon awoke to the mistake I was making. 

"I had so much capital tied up in surplus stock that 
I had to sacrifice variety. Had I carried half this sur- 
plus I should have been able to double on my variety and 
so double my chances of making sales. More than that, 
I lost fully as much in discounts as I saved on quantity 
purchases. One day I soberly figured out the whole 
proposition, saw that I had not been taking into con- 
sideration the extra insurance which large stocks made 
necessary, nor any of the other disadvantages I have 
mentioned. On the spot, I resolved to change my sys- 
tem. 

"I have been buying in smaller quantities now for 
several years and this is one of the chief reasons why 
my business has grown and prospered. Larger sales, less 
dead stock and fewer risks have resulted. More than 
this, I believe that advances which have occurred have 
always been balanced by slumps, so that I have pur- 
chased my stocks quite as cheaply as though I had 
bought in large quantities." 

DEALERS can educate their cuttomert a grocer 
taught his trade to want different brand* of good* 
how he finally concentrated hit telling cjfortt. 

"When I started in business," said a Wisconsin 
grocer who is considered a shrewd buyer, "I stocked 
three brands of flour, a high-grade spring wheat, a 
blended flour and a winter wheat pastry flour. Each 
was as good as any of its class and my flour trade 
started out briskly. 

"Soon a salesman induced me to add another brand. 
In a few weeks I got a reduced price on a competing 
brand and stocked a few barrels on that. And so I 
kept on adding new brands. I found in time that I had 



68 HOW TO BUY 



made a vital mistake in making these shifts. Each time 
I bought a new brand, at least one or two customers 
took a fancy to it and made up their minds that it was 
the best they had ever used. "When I tried to switch 
them back to one of my older brands they objected. I 
had split up my trade into six or seven different fac- 
tions, each loyal to a particular brand. That meant, of 
course, that I had to stock all of the six brands in order 
to do the same business I had been doing before with 
three. More than that, it was necessary to buy re- 
spectable quantities of each kind in order to get the 
right price and satisfactory deliveries. So I really had 
to carry double the stock I needed. 

"Today I carry a complete variety of everything in 
my line, but as few brands of the same quality as pos- 
sible. I have my trade lined up solidly for certain 
brands that we both know are right. By avoiding 
foolish duplications I have a nice little reserve fund that 
is working for me in another field and paying me well. 
Too many merchants are making my first buying mis- 
take and are carrying twice the stock they require be- 
cause they buy too many duplicates." 



T^O WORD in the vocabulary of business is more preg- 
*' nant with significance than that one word "quality." 
You may apply it to goods, to service, to ability; this one 
truth is universally the same no extravagant assertion of 
present advantage, no false logic of economy can long make 
headway against down-right merit in merchandise or man. 

Edwin W. Moore 

President, The Electric Cble Company 



PART II-SYSTEM IN THE 
PURCHASING DE- 
PARTMENT 

What Customers Want 

/^ ET the customer's idea. Give him what he 
wants. If you haven't got it, get it for 
him. Willingness to adopt the buyer's point of 
view I have found to be the most effective way 
of building a business. 

Nine times out of ten the customer knows ex- 
actly what he wants. Suggestions intended to 
make him change his mind, and offers to substi- 
tute, even when substitution seems to be to 
his best interest, are often mistakes. Unless the 
man behind the counter is in complete possession 
of the buyer's plans, advice leads to argument, 
and argument to irritation. An irritated custo- 
mer is a lost customer. 

Keep a variety of stock. At the start, when 
capital is limited, such a plan may seem difficult 
to follow, but the man with the courage to hold 
to a few leading lines, well stocked, until his busi- 
ii' jiMiti'^ further expansion, is the man who 
will win. Make your store the place where cus- 
tomers get what they want. Let them select. 





J. D. LOWMAN 

President, Loicman-Hanford Company and Former 
President, Seattle Chamber of Commerce 



VII 

SHORT-LINE METHODS IN 
RETAIL BUYING 

By Neil M. Clark 

ONCE the buyer has decided what to buy and where 
to place his order, his system comes into play to 
help him secure correct deliveries and secure them 
promptly. If he has final say as to what shall be pur- 
chased in his department, a requisition need not be used. 
If, however, the approval of some one higher up is re- 
quired, the buyer may place a preliminary requisition 
with the manufacturer, with the understanding that the 
latter is to receive a confirming order bearing the signa- 
ture of the manager or other proper official. 

Such a system is used by a successful department store. 
It uses two forms, each made out in multiple. The buy- 
er's requisition^ Form I) is made out in triplicate. The 
first copy is handed to the salesman or sent to the manu- 
facturer. The second remains bound in the buyer's 
book as his permanent record. The third copy is at- 
tached to the regular confirming order when the latter is 
sent up for approval. 

The confirming order (Form II) contains exactly the 
same information in regard to goods required as the 
buyer's requisition. In fact, the buyer himself copies 
the information to it from his requisition copy. This 
form he sends to the merchandise manager for approval. 

There are five copies of this order. If the purchase 



PURCHASE SYSTEMS 



is approved, the first copy goes to the manufacturer as 
a confirmation of the buyer's requisition. On the re- 
verse side of this copy are the conditions of purchase, to 
which the seller must agree if he accepts the order. Time 
of delivery is considered the essence of the contract. If 
merchandise is not delivered on or before the specified 



HOPKINS A COMPANY 

HARTFORD. CONN. 



HOPKINS &. COMPANY 



FORM I: The "buyer's requisition" is sent to the manufacturer or handed 

to the salesman by the buyer. If the purchase is approved, a confirming 

order is sent later 



date, the buyer retains the option of accepting or refus- 
ing it, as desired. Goods not up to sample or standard 
may also be returned, or held subject to the order of the 
shipper, and at his risk and expense. 

The second and third copies of the order are returned 
to the buyer as soon as the purchase has been approved. 
He keeps the second copy on file. On the third, he 
marks the price at which he expects to sell the goods, 
and then sends it to the receiving room, where it remains 
until the goods come in. Against it the receiving clerk 
checks the invoice. 



STORE BUYING 















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74 PURCHASE SYSTEMS 

The fourth copy of the purchase order remains in the 
buyer's book. The fifth is peculiar to the system of 
this store, which has a New York office where all orders 
are kept on file. This last copy is sent to New York 
when the first is sent to the manufacturer. 

PURCHASING routine in the retail store that leaves 
no loop hole for the contract-evading supplier 
inventory methods and order blanks in actual use. 

Inventories are always an invaluable guide for the 
buyer in knowing how his stock stands, and whether his 
purchases in the past have or have not been wise. In 
this store inventories are taken in a single night. A 
perpetual inventory keeps track of increasing or decreas- 
ing stocks; but the actual count is made periodically to 
correct the errors which naturally creep into this sheet. 

Three persons are necessary for the taking of in- 
ventory in each department. The first writes the details 
of stock on Form III as the second calls them off, record- 
ing quantity, name or number, cost and selling price of 
each article. The third person is the firm's represent- 
ative, so-called, and he is responsible for the return of 
every inventory sheet at the close of the count. He 
merely watches the inventory-taking to see that it is 
done properly. He is responsible for the work of all 
three. 

Each one of these inventory sheets is numbered, and 
its value is placed at $100,000, since the loss of a single 
one may necessitate the complete retaking of the in- 
ventory. Therefore, the firm's representative must re- 
turn all his sheets to the accounting department in a 
sealed envelope, whether they have all been written on 
or not. The envelope bears the number of the depart- 
ment and the signature of the firm's representative certi- 



STORE BUYING 



75 



fying that no sheet has been misplaced. This actual in- 
ventory is checked against the perpetual inventory. 
Small variations are expected, because it is next to im- 
possible to keep a large stock of goods with absolute ac- 
curacy; but a large discrepancy calls for a recount in 
the department concerned. The second actual inventory 
is considered final. 

In a smaller concern, a retail jewelry store, Form IV 
is used for all orders, and combines in itself both the 
buyer's requisition and the confirming order of the de- 
partment store. Three copies of this order are made. 



INVENTORY SLIP 


10 1 


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0tl HO. 


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QUANTITY 




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FORM III: Each inventory tlip it given a nominal value of $100,000, 

rince the lota of a tingle one may necettitate the retaking of inventory in all 

departments 

The first goes to the seller; the second remains in the 
department order book; and the third is sent to the 
receiving department, where it is checked against the in- 
voice and the goods when they arrive. 

One interesting and valuable feature of this system is 
that the shipping labels are already made out and at- 



76 



PURCHASE SYSTEMS 






.u * WARD & HITCHCOCK 

6 SOUTH WATER ST. 




IIIS.CAU1 

DCPT. N( 


4 PACKAGE*. 
1 


















. 0OtRTCt 






OCX 

ORDER NO. <OT 


:HEHEHEEH=::^^::^^^ 








PRICE 


AMOUNT 










































































































































































































































* T * Si 




RESS PREPAID 


G GOODS TO US: J EXP 


MAIL " " FORWARD TO 

FORWARD TO WARD 4 HI- 
WARD & HITCHCOCK 6 SOUTHS 
SOUTH WATER T. CHIC* 
CHICAGO . Ma 


rCHCOCK 

ATER ST. 
kGO 
.^,. ./. "> 






1 



FORM IV: This order form, made out in triplicate, is novel became <>f 
the attached shipping labels 



STORE BUYING 77 



tached to the order blank. The company's goods are all 
shipped by mail or express, being small in size and ex- 
tremely valuable. Notice that the shipping label con- 
tains the order number; this makes it easy to identify 
shipments when they arrive. 

To be valid, each order must bear the counter-signa- 
ture of a member of the firm. Orders are not so numer- 
ous that one man can not inspect them every day in a 
short time. 

"We have tried a good many systems," said one of 
the members of this firm, "but our present order book 
meets our needs better than any of the others. We have 
been using it for four years, and in that time have not 
found it necessary to make more than one or two slight 
changes in the forms." 

Correct order routine means correct delivery. An 
order placed and accepted by the seller becomes a lia 
bility of the concern which buys and that concern must, 
therefore, keep as accurate a record of goods en route as 
of goods already in the store. Right system in the me- 
chanism of purchasing wins the respect of the seller, and 
is a great help in getting the right goods at the right 
time. 



great art few, the mediocre many, but the few who 
hare tcored highest in the burinet* game are the men 
tcho hate built on "quality." 

Edwin W. Moore 

Fmktent. The Htectrfc (UbU I 



VIII 

HOW THE SUPPLY BUYER 
WORKS 

By Neil M. Clark 

1 UPPLIES are an item whose purchase may result in 
1^ big wastes or savings, according to the character of 
the man in your organization who does the supply buy- 
ing. A careless man will inevitably allow little leaks to 
creep in, while the conscientious man will frequently 
save many times the amount of his salary. Pencils, pens, 
rubber bands, filing cases, report blanks all the inci- 
dental items so essential to the smooth running of the 
office, store or factory, will offer any number of op- 
portunities for the wasted nickel to become the lost 
dollar, unless a careful watch is kept along every 
avenue of expense. Constantly on the alert, watching 
the machinery which insures the smooth working of 
office or store, the supply buyer also frequently has the 
opportunity to improve the quality of service. 

A new buyer coming into a large department store in 
the East found a heavy and fairly expensive grade of 
wrapping paper used in one department. The buyer 
found it impossible to secure a sufficiently durable 
quality at a cheaper price. He therefore searched the 
market for a paper possessing the same weight and 
quality, but having in addition some peculiarity to make 
it distinctive. He discovered a paper which, besides 
being heavy enough to meet all needs, was also water- 



SUPPLY BUYING 7 

proof. By substituting this for the old style of wrapping 
paper, the supply buyer added a distinctly new quality 
to the store's service. 

Savings in supplies must come, if at all, from a proper 
purchasing organization and a mechanical system which 
takes care of the routine work of fact-gathering. The 
supply buyer ordinarily requires four kinds of informa- 
tion. When an article is called for, he must know what 
department or individual desires it ; what companies sell 
it and what quotations or catalogs of theirs are on 
hand ; what purchases of that article have been made in 



Of ( iVC Tft 


REQUISITION FOR SUPPLIES 

0T 


OCPT. 




AMOUNT 


NAME OF ARTICLC 


































OMDCMS riLLI 




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FORM I: The requisition for tupplie* which the ttock clerk mutt receive 

before anything leave* kit department doci away with petty vxutet which 

otherwise art likely to creep in 

the past and at what price; finally, if the article or a 
substitute is ordinarily carried in stock, what the balance 
on hand is. 

The stock clerk must receive a requisition (Form I) 
before he can deliver articles to any department. Ordi- 
nary supplies, such as pencils and standard blank forms 



80 PURCHASE SYSTEMS 

which are being called for constantly, are kept on hand 
in quantity lots. The stock record card (Form II) 
keeps track of the amount of each kind of supply, and 
by comparing the balance column with the minimum 
limit, the buyer learns when to re-order. 

METHODS, blanks and tactics used by the clever 
supply buyer to effect savings and always have the 
right kind of material, en hand uhen called for. 

Another method used by the supply purchasing agent 
of a large electrical concern to keep track of standard 
supplies and the proper time to re-order, provides for de- 
tachable bin tags (Form III) of two colors. A third 
tag (Form IV) is tacked on each bin. It gives the num- 
ber and description of the material which the bin con- 
tains, and also maximum and minimum amounts allowed. 

Every week the stock-keeper goes over his stores and 
reports the amount of each kind of material that is left. 
When any bin has reached the minimum limit, he sends 
in a purchase requisition to the supply buyer for the 
maximum amount or whatever conditions warrant. He 
places the red tag marked "requisitioned" (Form III) 
on the screw-eye over the bin and notes the date. This 
tag tells him automatically, without his having to look 
through his files, that he has placed the necessary re- 
quisition. In a day or so he receives a duplicate of the 
order, if the matter has been brought properly to the 
buyer's attention. The stock-keeper then replaces the red 
tag with a blue tag marked "ordered" (Form III). As 
soon as the goods come in, the blue tag is also removed 
and the stock-keeper need not worry until the minimum 
limit is again approached. 

This system forestalls the possibility of supplies fall- 
ing short at critical times. In passing the bins the 



SUPPLY BUYING 



81 



stock-keeper, several times daily, glances at the red tags; 
and in case they remain an undue length of time before 
notice comes that the goods have been ordered, inquiry 
immediately shows the reasons for the delay. 

A record of purchases actually made in the past is 
extremely valuable for the supply buyer, since it shows 
whether purchases are being made now to as good ad- 
vantage as formerly. The truly economical purchase, 
also, is brought to light, and the firm whose deliveries 
have been less satisfactory in quality or promptness gets 
a black mark against subsequent orders. 



HJUL 


MAT! 


RIAL i- 














Nccciycp 


WITHRAWN 


OALANCE 


MCCCIVCO 


WITHDRAWN 


BALANC t- 
ON HAND 


DATE 


AMT. 


OATC 


AMT. 


M M '. SD 


OATe 


.-. :i r 


OATC 


AMT. 











































































































































































































FORM II: A card like thit, one for each kind of material, keeps track oj 

amounts on hand, and supplement* the stock room system, helping the buyer 

to know what purchases to make 

Important, also, are the card index of quotations and 
the classified list of catalogs. These records may be 
simply and effectively kept on 3x5 or larger index cards. 
On them the buyer has in brief and convenient entries, 
the points which guide his purchases the sources 
of his supplies. Comparison of the prices of the dif- 



82 PURCHASE SYSTEMS 

ferent firms, and a few test orders, will soon teach him 
where he can purchase in a really economical way. 

The supply buyer often has a chance also to stand- 
ardize throughout the establishment in such a way as to 
reduce total cost. A department store found that it was 
using several kinds of stock record sheets in different 
departments. Each department manager had suited his 
own fancy in the matter, and the printing bill conse- 
quently was much larger than it should have been. A 
little investigation convinced him that one form would 
answer the needs of several of the departments. He 
consulted the department heads and succeeded in work- 
ing out a single form which was suitable for several of 
the departments. Besides the first cost of printing, 
there was also a saving due to the fact that the new 
forms could all be bound in one book form; whereas 





FORM III: The stock clerk hangs a card like that at the left over the bin 
when goods have been requisitioned; when they have been ordered, he re- 
places it with the card at the right 

before it had been necessary to have a separate style 
and size of binder for each department. Wastes of this 
sort can often be caught and stopped by the careful 
buyer. 

On special supplies articles which are required in- 
frequently the buyer may have no information in his 



SUPPLY BUYING 88 

files. The speediest way of getting pointers in such cases 
is to consult several salesmen. The supply buyer in a 
western factory uses this method when he needs an out- 
of-the-ordinary article quickly, and knows nothing about 
his sources. 

SPECIAL tupplies are frequently demanded how the 
buyer get* information on them buying quality 
rather than trying to tecure initial low price. 

"If I got a call for saddles," he said, "I should im- 
mediately call up a man who uses saddles and find out 
who he buys from, as well as the suppliers he knows 
of. Then I should call in the salesmen from those 
houses and talk with them one at a time. In a very 
short while I should know the good and the bad points 
about saddles, simply from listening to what the dif- 
ferent men had to say in praise of their own lines against 
certain other makes. If one man says, 'My saddle is 
just as good as Pearson's and the price is lower,' and 



DESCRIPTION. 



FORM IV: The "bin tag" if tacked orer each bin, and thoua the fixed 

maximum and minimum limits for that kind of material. When the 

minimum it reached the ttock clerk requisitions the maximum amount 

another says, 'Pearson has a good saddle, but his stirrup 
can't compare with mine'; I soon recognize that Pear- 
son must be the standard man in the saddle business, 
since every other dealer wants to convince me he is the 
equal of Pearson. ' ' 

In many businesses, printing is a big item ; and some 



84 PURCHASE SYSTEMS 

firms find it easy to save here, especially when they have 
large lots of standard forms or circulars which do not 
need to be put out as a rush order. Price alone is not 
what the efficient buyer is seeking. He is looking for 
the quality which best suits the needs of the user. In 
the letterheads of the business house, there is no econ- 
omy in trying to make a cheap writing paper do the 
work of a grade which better represents the house. 

" Recently I had to place an order for two hundred 
thousand circulars," said the buyer in a mail-order 
house. "I had had the same job done before at the rate 
of $2.10 per thousand, which would have made the total 
cost on this lot $420.00. I got in new bids, however, and 
they ranged as follows : 

First $150.00 

Second ., 195.00 

Third 290.00 

Fourth 420.00 

Fifth 475.00 

"These estimates were all from printing houses whose 
work I had tested again and again. I knew I would get 
my money's worth wherever I placed the order. The 
question then resolved itself into, how much do I want 
to spend? 

"I wanted a $420.00 job; but I took a chance on the 
third bid of $290.00, thinking I might save and still get 
satisfactory work. That was, pure and simple, a blunder 
on my part. "When the job was done, however, I saw 
my mistake. Half of the two-color illustrations were 
nearly an eighth of an inch out of register. I had what 
I paid for; but I had not bought what I wanted. I 
wanted a $420.00 job. I saved $130.00 in money, but 
nobody knows how much the firm lost by sending out cir- 
culars that were not strictly up to the mark." 



SUPPLY BUYING 85 

Thus the supply buyer is continually watching the 
corners. lie is convincing the man who demands sup- 
plies that something a grade cheaper will suit his needs 
as well as a more expensive article. On the other hand, 
he sometimes has to convince others that what they wish 
to order is not of a sufficiently good quality. lie has his 
eye on the markets and a thousand strings lead to his 
desk from the desks of as many suppliers. He is saving 
dollars, if he is efficient, at the point where necessity 
shades into luxury. Not primarily a bargain hunter, he 
is nevertheless interested in knowing the lowest price for 
the best material that is suited to the odds-and-ends 
needs of the business machine. 



YTOU con never accomplish anything permanent in business 
1 by loote tactic* that are grounded on chance. You mutt 
have system. You mutt aim at a definite target. You mutt 
thoot straight and not in the air. Every part of a business 
machine mutt fit perfectly. It mutt be ad jutted according to a 
tet plan. 

A. Montgomery Ward 

Founder. Mc*t(ua]r Ward * CoBptay 



IX 

FACTORY PURCHASING BY 
MINIMUM STOCKS 

By F. B. Johnson 

TO HANDLE the many details of a purchasing de- 
partment with the accuracy necessary in such 
work requires a definite, coherent plan of ordering, 
filing and recording. No half-way methods are in any 
sense available, for prices must be definitely kept in 
mind and deliveries hurried in on the desired date. 

A system for expediting the work of the purchasing 
agent in any large business must be essentially prac- 
ticable, and it is such a system, already found successful 
in a large concern, that is here described. At the outset, 
to make the general scope of the system clearer a brief 
description of the size of this concern and its scheme of 
organization will be found of value. 

The concern is engaged in the manufacture and direct 
sale of certain articles made of wood, paper and steel, 
and its business has grown from a very small beginning 
to large proportions; it is organized on the sales side 
first by large geographic divisions, each under the charge 
of a central office, the manager of which has entire con- 
trol over his territory and is responsible only to the 
directors of the concern at the home office. 

On the manufacturing side it is divided into a number 
of factories, located in several towns which are, with 
two exceptions, at quite a distance from the home office 



FACTORY BUYING 



87 



of the concern, where the purchasing agent's office is 
located. 

These physical conditions of location necessarily make 
the system seem a little more elaborate than it would be 
if all departments or branches were side by side, for, 
because of the distances by which the different offices 
and factories are separated from the purchasing agent's 
office, it has been found necessary to give to each office 
and factory the right to make certain emergency pur- 
chases. 

The diversity of location of the factories has rendered 
it necessary to maintain a store-house at each factory for 



NO. 














MIVO. |* 


1 

oo o 




| PUkNT O. 


E 


TANO O. 


vAMTmr 


























RCQUKITIOM NO. 


TO O(PAHTM(NT 
rOUCKAN 


OATI 






































































MMWOCf WANTCO IT WHAT 


OMOCMI *T 


APPftOt 


to 







FORM 1 (front card): Rcqviritian blank made out by foremen and tent 

to the tton-keeper. FORM II (bock card): The detailed requisition tent 

to the buyer when goods are exhausted 

the handling of raw material and factory supplies, and 
the similar diversity of location of sales offices has ne- 
cessitated the maintenance of a stock of manufactured 
goods and stationery and office supplies at each office. 
Fortunately a well organized stock inventory system, em- 



88 PURCHASE SYSTEMS 

bracing in its scope both raw material and manufactured 
product, has rendered the emergency purchase an infre- 
quent occurrence involving only comparatively small ex- 
penditure. 

I/iACTORY purchasing methods which assure each 
A department of always having on hand goods as they 
are needed requisition and order blanks required. 

All requisitions for the purchase of raw material and 
factory supplies originate either from the store-keepers 
at the various plants or from the foremen, but the re- 
quisition blanks made out by the foremen (Form I) do 
not go to the purchasing agent. All requisitions on the 
general store-keeper or purchasing agent for material 
for any factory, whether the need originates in the 
store-house or in the shop, are made out by the local 
store-keeper at the factory where the material is to be 
used (Form II). These requisitions are then approved 
for quantity and date needed by the superintendent in 
charge of the factory in question and are forwarded to 
the purchasing agent's office through the general store- 
keeper's hands. Only such requisitions as the general 
store-keeper cannot supply reach the purchasing agent 
in their original form and these are marked to show that 
the general store-keeper cannot fill them. A requisition 
which the general store-keeper fills does not go to the 
purchasing agent but to the cost and accounting depart- 
ment instead. 

All requisitions, originating at any factory or store- 
house, are made out in triplicate on blanks of uniform 
size and form, and numbered in triplicate; a different 
color is used for each factory. Foremen's requisitions 
on local store-keepers are made out in duplicate, or 
singly as the various foremen prefer. Each of the re- 



i \< rom HI YIN<, 



quisitions bears (to save writing and for cost account 
purposes) the name or number of the department in 
which it originates and to which it is charged in the 
' It-part mi-lit. If chargeable to any manufacturing 
order it bears a notation to that effect. 

The local store-keeper collates each day the foremen's 
requisitions which he cannot fill, so that he may not send 
to headquarters two or more requisitions for small quan- 
tities of the same material. He also compares them with 
his file of foremen's requisitions (covering material he 
has requisitioned but not received), so that he may not 
requisition any material that may not be needed. This 



PURCHASE ORDER NO. 



PRICE 



PROD O. NO. 
PLANT O.NO. 

ron 



HIP O.NO. 

TAMO O.NO. 



A T. HUTCH INS & CO 

PURCHASING AGENT 



/Y)7?J/ 7/7: The purchasing agent' a purchase order it made out in quad- 
ruplicate; the copies, other than that tent to the tcUer, are retained /or the 
tickler and general jilc* 

means that he files alphabetically by name of commodity 
all foremen's requisitions which have been transcribed 
by him to his own forms. He notes on these foremen's 
requisitions the number of his own requisition on the 
general store-keeper. 



90 PURCHASE SYSTEMS 

When a requisition is made out by a store-keeper the 
original is forwarded to the general store-keeper, if 
covering material commonly supplied by him, but other- 
wise direct to the purchasing agent. The duplicate is 
retained and filed by number while the triplicate is re- 
tained and filed by date wanted, as a tickler for follow- 
ing up the general store-keeper or purchasing agent. 
The requisition number is used in all correspondence re- 
garding any requisition. 

The general store-keeper at the central store-house 
fills from his own stock all requisitions that he can; 
when he cannot fill a requisition in full but does fill it 
in part he treats it as the local store-keeper treats a 
foreman's requisition, except that he files it by number, 
pending the arrival of the goods ; if he does not fill any 
part of it, or if the goods are to be shipped to a local 
store-house direct from the vendor he forwards the local 
store-keeper's requisition to the purchasing agent with 
his own memorandum that he cannot fill it. 

The purchasing agent in placing purchase orders 
bunches on one purchase order as many requisitions as 
possible for the same kind of material. Each purchase 
order bears the numbers of all requisitions covered by it 
and each requisition bears the number of the purchase 
order which covers it, also the name of the vendor from 
whom the material is ordered. In the purchasing agent's 
office requisitions are filed by number pending receipt of 
notice of arrival of goods. 

All purchase orders are made out in quadruplicate or 
quintuplicate (Form III). The original is sent to the 
vendor, the duplicate is retained and filed alphabetically 
by the vendor's name, the triplicate is sent to the store- 
keeper who is to receive the goods, and the quadruplicate 
is retained and filed in a tickler. The quintuplicate (if 



FACTORY BUYING 



01 



used) is for the information of the cost department, 
especially valuable for charging to the plant investment 
of each department any items of permanent equipment, 
and for charging to shop orders the cost of material 
ordered for use on them. 

When material has been ordered the store-keeper who 
is to receive it is sent a copy of the purchase order cover- 
ing it. If the material does not come in on time he noti- 
fies the purchasing agent of the delay. 

When the goods are received by any store-keeper the 
packages are easily checked up from the purchase order. 
If only a partial delivery on the order has been sent, he 
notes the receipts on the back of the order and reports 



REC'D fROM 


DATE PURCHASE 
ORDER NO. 


QUANTITY 


DESCRIPTION 


CONDITION 










DELIVERED VI* 


CHARGE* PREPAID 


AMT. Or CHANGES PAID 


PUT IN STOCK? 
DELIVERED TO> 


RECEIVED SV 



FORM I V: If the ttore-keeper receivet only part of hit order ; he maket out 
thit partial delivery report; He maket a final report on the 



vhen delivery it completed 



back of hit copy 



his receipts on a partial delivery blank (Form IV), 
making a final detailed report on the back of his copy 
of the order when the delivery is completed. The tickler 
copy of his own requisition may then be destroyed and 
the other copy filed by number. 

When the purchasing agent receives the notice of a 
complete delivery he files it with this purchase order of 



92 PURCHASE SYSTEMS 



the same number, pending the arrival of the invoice, ap- 
proves it, if everything is O. K. as to price and quantity, 
and forwards it to the auditor for his approval. He 
then files (by order number) the copy bearing the report 
of delivery and files (numerically by vendor's number) 
the duplicate copy which he has been holding in his al- 
phabetic file of unfilled orders. Before filing, each copy 
should be made to show in full the price of the goods 
covered by it. His copy of the local or general store- 
keeper's requisition he files by requisition number. 

The cycle of operations is now complete; the system 
has provided for furnishing all the information desired 
at every step of the way and no unnecessary papers have 
been filled out or filed. Every paper, either in the cur- 
rent or temporary file, has been accessible instantly from 
the natural point of approach, and every paper placed 
in the permanent file is likewise accessible in a similarly 
natural manner with no false steps and no delay. 



'T'HE most essential possession of any person seeking 
* credit, or anything else worth while, is character. Hav- 
ing this, one may not only seek but readily achieve success. 
The late J. Pierpont Morgan, who was a masterful judge 
of man, said a short time before his death, that integrity is 
the one essential thing in business; that he would lend a 
million dollars to a man of integrity without collateral, when 
he would not lend, on government bonds, a dollar to a man 
without character. 

With no other asset but integrity of character any man of 
business may gain the confidence of his banker. And con- 
fidence is the basis of all credit. The word itself meant 
faith or belief. 

J. T. Talbert 

Vice-Prei Ident, National City Bank ol New York 



ADAPTING A PURCHASING 
SYSTEM TO YOUR BUSINESS 

By Su mncr B. Rogers 
Production Manager. Sangamo Electric Company 

OXLY within recent years has the purchase requisi- 
tion become a part of the general purchase system. 
Even in small businesses at the present time, where the 
superintendent or one of the partners acts as purchasing 
agent, the use of requisitions is dispensed with and the 
purchasing order in this case acts as a requisition also. 
In other words, the department requisitioning the ma- 
terial fills out the order which the purchasing depart- 
ment translates into trade language. Often the purchas- 
ing requisition does not constitute a principal part of 
the general system. It is used primarily to facilitate 
transactions between the purchasing agent and the fac- 
tory or store-rooms and this purpose is usually accom- 
plished as soon as the goods have been ordered and re- 
ceived. It also acts as a reminder in case the purchas- 
ing department fails to give the matter the necessary 
attention. 

Probably the principal departments in which such a 
form will be used in a medium-sized factory are the 
stores and maintenance departments, foreman's and gen- 
eral offices. It may be used any time supplies are neces- 
sary, and it may originate from any of the departments 
mentioned. However, it should not be used as a receiv- 
ing report, which is sometimes done. Now, since it may 



94 PURCHASE SYSTEMS 

originate with almost any one, the form should have a 
space for the approval of a department head. 

The purchase requisition is used only as a reminder 
and is not permanent. Therefore, under ordinary cir- 
cumstances it need not be filed after acknowledgment by 
the purchasing department, but can be destroyed. For 
this reason, the form may be printed on reasonably 
cheap paper, possibly in pad form. The service the re- 
quisition will perform is limited and need not receive 
much attention. The paper need not be of an expensive 
or durable quality, and usually no color scheme is neces- 
sary. Sometimes, however, one red copy is made which 
is forwarded to the purchasing department by the 
originator when no apparent action has been taken upon 
the original requisition. 

DATA which needs to appear on the purchase requisi- 
tion how to draw up a form which shall be most 
efficient and most fully meet all your needs. 

Generally the following information should appear on 
a purchase requisition: the requisition number; date; 
to whom sent ; how material is to be used, in conjunction 
with what job, order, item or work ; when wanted ; 
quantity; description of the material; where to be de- 
livered ; who originated the order ; space for purchasing 
department to specify purchase order on requisitions 
before returning, and such other items, depending upon 
the specific requirements. 

Regarding the sequence of information, the title of 
the form, "Purchasing Requisition," should appear first. 
Unless the form goes outside of the plant, the name of 
the company need not appear, but in case the factory 
mails the form to a general office in another location, it 
is well then to have the firm name printed on the form. 



YOUR ORDER FORMS 95 

The next item of importance is the destination of the 
form, such as "To Purchasing Department." This 
should follow with a general description of the materials 
required, for such and such a job or order, and so on. 
Then ample space should be left for the material re- 
quisitioned. Following this, spaces should be assigned 
for the place of delivery; date wanted; person who 
originated the requisition ; space for approval ; space for 
purchase order assigned, and so on. The items of promi- 



RI 

TO PURCHASING Ol 


QUISITION FOR OUTSIDE MATERIAL 

PT 




QUANTITY 


DESCRIPTION 








WANTED ? 


APPROVED 


OCPT. MEAD 



FORM I: The purctuise requisition reduced to its simplest term* it hen 

ihoicn. It it handed to the purchasing agent, and y he approves, the 

purchase order is then made out 

nence should be the title, the destination instructions, 
the place of delivery and the date wanted ; also the pur- 
chase number assigned. 

Consider the balance and appearance of the form, but 
not at the expense of any of the necessary items. The 



96 PURCHASE SYSTEMS 

number of duplicates required, of course, depends en- 
tirely upon the factory. The different kinds of type 
should be as few as possible, and the majority an eight 
point Gothic. Those items which need prominence 
should appear in striking type. 

As soon as all of the items have been decided upon, 
draw up a sample similar to Form I. Submit this to 
the purchasing department, the superintendent and 
other department heads interested for approval before 
you order a definite quantity. The form should be of 
the same size as the purchasing order and of the same 
general type. As soon as the necessary orders for these 
forms have been placed, issue standard instructions as 
to the detailed manner in which to use them. 

Of course, before the order is placed, it is taken for 
granted that any objections to the form will have been 
considered by the various department heads, so that 
no change in the design of the form will be necessary, 
unless radical changes in the general system become 
essential. 

WHAT information to put on the purchase order 
blank points in layout and ordering routine that 
need to be considered how to keep up the stock. 

Upon receipt of the purchase requisition, the purchas- 
ing department considers this requisition as its authority 
to issue a formal purchase order. This order is used 
primarily to record transactions between the company 
ordering the material and the seller, and thus eliminates 
the major part of the correspondence between these 
parties. In addition, it is often used in the factory for 
routing the material from the vendor to its proper des- 
tination in the plant, and also to see that it arrives 
there at the proper time. 



YOUR ORDER FORMS 97 

The purchase order, or a copy of it, probably passes 
through as many hands and as many different depart- 
ments as any form used, and, therefore, should be de- 
signed with this idea in view. It must also form a 
permanent record of transactions between the company 
and the market. It will continually be referred to and 
the service it must perform is fully as severe as that to 
which any other factory form is put. Therefore, it is 
best to print these forms (in triplicate or quadruplicate, 



. fouTH (T.tlT IOWO* TMf C<mCO.l'O.IIOMOl >'M<' '* 

THE CMANON COMPANY 

mo 7304 
mi o M Avenue 

MMMVM 



OCUVCH TO 

ran 



FORM II: In a large plant more information may be required than it 
ture thown on the purchase order. For the rmall plant, however, thit if 

tufficient 

as the case may require) on a very good quality ol 
bond paper, in sizes about 4x6 or SV^xll, in the clearest 
possible type. The original copy which goes to the 
vendor should be on white paper, printed with copy ink. 
A color scheme is nearly always best In many cases 8 



98 PURCHASE SYSTEMS 

yellow copy acts as the purchasing department's file 
record, and the blue the receiving clerk's record, with 
other colors as required. Often the production and 
stores departments receive copies. 

The information to go on the form depends entirely 
upon the nature of the material manufactured, the size 
of the factory and the make-up of the organization. Two 
examples of purchase orders (Forms II and IV) are 
shown. One is used in a medium-sized plant, the other 
in a large factory. Usually the following information 
should appear on all purchase orders: the purchase 
number, name of company, location of company, to 
whom the order is charged, the material wanted in de- 
tail, the date wanted, price, terms, conditions of accept- 
ance, signature of purchasing agent and a notice to the 
effect that the purchase number must appear on the 
invoice. 

The sequence of information, while not of the most 
vital consideration, is yet very important. In most 
cases the purchase order and the firm name should ap- 
pear at the top, next the purchase number and the loca- 
tion of the firm should appear, then it is customary to 
state clearly what is wanted, and this should be followed 
by shipping instructions. The size of the space allotted 
for material, of course, is determined by the nature of 
the business. Down at the bottom space should be left 
for the purchasing agent's signature and a statement to 
the effect that the purchase order number must appear 
on the invoice. The spaces to be filled in on the type- 
writer should be arranged so that it will require the 
least amount of spacing on the part of the operator. 

The items that should be played up are these: the 
purchase order, purchase order number, company name 
and address, and finally the statement that the purchase 



YOUR ORDER FORMS 99 

order number should appear on the invoice. This infor- 
mation may be balanced somewhat, as shown in Form IV. 
Of course, the number of duplicates is determined by 



PURCHASE REQUISITION 

FORM NO. CMANON COMPANY 

TO PURCHASING DEPT MATERIAL A* LISTED BELOW is 

ACQUIRED " APPLY Q* 

ORDER JO* "> 



QUANTITY 



MATERIAL REQUIRED 



DELIVER THIS MATERIAL TO. 



A. M. 
P. M. 



SCHEDULE ASSIGNED. 



PURCHASE ORDER NO. ASSIGNED 

CMCOULCO rOH DELIVERY TO FACTORY 



PURCHASING OEPT WILL RETURN THIS REQUISITION TO 



NAME DEPT 



PURCHASING AGENT S APPROVAL 



FORM III: This purchase requisition contains more information than 

the one thown in Form 1, and more fully meet* intricate need* vhen put 

to actual use 

the specific requirements of the individual factory in 
the same manner that the number of copies of the pur- 
chase requisition is determined. One copy, generally the 



100 



PURCHASE SYSTEMS 



original, always goes to the vendor, one to the receiving 
department, one to the stores, and one to the produc- 
tion department. Many times definite shipping and de- 
livery instructions are included on the seller's and re- 
ceiving department's copies. On the receiving copy, all 
quantities are omitted so that this department must ac- 



PURCHASE ORDER OF THE EMANON COMPANY 



HILL ST. AND NASH AVENUE 
WASHINGTON 



PURCHASE NO.. 



.DATE. 



GENTLEMEN: KINDLY SHIP TO us THE FOLLOWING MATERIAL NOT 

LATER THAN i 191 



DESCRIPTION 



IT IS UNDERSTOOD THAT YOU ACCEPT THIS ORDER ON THE TERMS 
AS WRITTEN UNLESS YOU NOTIFY US TO THE CONTRARY 



ALL PACKAGES AND YOUR INVOICE MUST BE MARKED WITH 
OUR PURCHASE ORDER NUMBER 

THE EMANON COMPANV 



PER. 



PURCHASING AGENT 



FORM IV: This purchase order includes all the information that is 

required in any factory. If desired, all terms may be printed on the reverse, 

so that the seller accepts them in taking the order 

tually count out the amounts and make a report of them 
that must check with the original order. The stores 
department should receive on its copy the amounts listed. 
The type used should be practically the same as on the 
purchase requisition and the method of preparing the 



YOUR ORDER FORMS 101 

sample, obtaining the necessary approval and keeping 
track of the stock, would, of course, also be the same. 
Ordinarily the stock is maintained by the maximum 
and minimum limits system. The material is often placed 
in the store room, in packages of definite quantities. 
The lower package is then marked as follows "Before 
opening this package re-order in quantity of ." 

A few minor points are worthy of consideration. If 
the information on the form is to be typewritten, the 
spaces for this purpose may be made much smaller than 
if filled in by hand. The exact dimensions of the form 
should be such as to leave a small border around the 
form for convenience in handling. 

Machine ruled forms are expensive and you should 
avoid them if possible. When used, make as many of 
the lines as possible of the same length. This applies 
to vertical ruled columns as well as the horizontal lines. 

Consider the eyesight of the workmen. Many clerks 
with poor eyesight will be called upon to use this form, 
and unless the information is printed in reasonably bold 
type, mistakes will surely occur. "When any of the in- 
formation is to be written in long hand out in the shop 
more than enough space should be allowed for the pur- 
pose, otherwise workmen will write all over the adjoin- 
ing spaces. As far as possible, adhere to factory nom- 
enclature, so as not to confuse the men who are com- 
pelled to fill in the necessary information. 



T HAVE no hesitation in placing tyiirm at an dement of 
1 tucceu teeond in importance only to quality in the 
manufacturer' t product. 

John B. Stetaoo 

. Jeta . *< Cimttm* 



XI 

HOLDING THE SUPPLIER 
TO HIS BARGAIN 

By Carroll D. Murphy 

WE HAVE no trouble in handling incoming 
goods," said the purchasing agent of a large 
factory in western Illinois. "Being advised in advance 
what shipments are coming, our receiving department is 
able to have freight cars switched to the place most 
convenient for unloading and unpacking. This makes 
speedy and accurate checking possible. No unlabeled 
packages lie about for days waiting final inspection, 
which, if made at all, must then be hasty and unsatis- 
factory. We regularly get our materials on time, we 
get the quality we order, and whenever anything goes 
wrong we know where the blame lies. We aim to make 
prompt shipments to our customers, and the surest way 
to do that is to exact prompt and efficient service from 
our supply houses." 

In this concern the receiving department insists upon 
receiving notification by mail or 'phone, or in special 
cases by wire, that shipments may be expected at a 
certain time. Instead of arriving unexpectedly and re- 
ceiving scant attention, advance preparations assure the 
careful treatment and . prompt handling of all goods. 
A careful check on all items delivered by the railroad 
with notation of articles damaged en route, or lost, forms 
a basis for efficient entry of claims. Any shortage or 



ENFORCING THE BARGAIN 103 

defect in the goods themselves is referred to the supply- 
ing houses. 

Prompt inspection saves this firm annually a large 
amount which would otherwise be lost in short ship- 
ments, accidents or substitutions. Experienced men are 
encouraged to remain in the receiving department and 
their years of service are a great help in protecting the 
concern as to right quantity and quality in every ship- 
ment. 

'T'HOROUGH inspection at the receiving room door 
1 it essential if you are to receive right quality and 
honest quantity in the goods you have ordered. 

As far as possible, each shipment is checked entire, 
so that all necessary charges and adjustments can be 
made at one time. Yet the system fully provides for the 
hurry-up item. 

"In fact," said the purchasing agent, "we handle so 
much rush stuff, that our method has become very 
flexible. A special blank, instead of a duplicate copy of 
the order, warns the department to watch for the item 
which is needed at once. The clerks have learned to pick 
it out, O. K. it and swi g it instantly into the current 
of processing and sales. A frenzied foreman need not 
p.hout into the 'phone for materials whose absence is halt- 
ing production in his department. The special blank 
and red follow-up shout for him. Departments pet their 
materials on time, checked for quantity and quality. We 
never drive away our trade by putting uninspected 
goods into rush orders. Promptness, not omission, is our 
safeguard. ' ' 

Follow-up to insure prompt delivery, right inspection, 
and the rigid enforcement of contracts or salesmen's 
agreements are the purchasing agent's best insurance 



104 PURCHASE SYSTEMS 

against short-sighted, dishonest or careless deliveries on 
the part of the seller. Clever handling of your receiving 
routine will minimize mistakes and delays, and will pro- 
vide against many, even of the so-called "inevitable" 
errors. 

Receiving goods right is the first step in the successful 
processing or selling of them. Directly contrasted with 
the smooth routine prevailing in the above concern are 
the haphazard methods followed by a Southern furniture 
dealer. Very often crated couches, tables and chairs 
will stand for days on the sidewalk in front of his store. 
His success is on the wane, and he is laying the reason 
to "hard times" and the growth of competition. Yet 
to the outsider it seems apparent that his lack of method 
in purchasing is one of the biggest factors in the sales 
slump. 

Recently a carload of goods came for him unex- 
pectedly on a busy afternoon, and the lot was unloaded 
as usual on the sidewalk. Labor happened to be scarce 
and teaming schedules were badly disarranged. As a 
result, the freight papers gave no evidence of the rail- 
road's responsibility for one crate which was badly 
smashed. Attempting to adjust this claim with the 
shipper in far away Minnesota proved a slow, costly and 
unsatisfactory process. In the meantime, trade was 
being lost on the item every day. 

One piece in this shipment was a cane couch of a par- 
ticular style, on a special order for a valued customer. 
Hustled into a delivery wagon without being uncrated, 
it was delivered only to be angrily refused. Inspection 
after this refusal showed the finish to be a slovenly, 
badly scarred high gloss instead of the dull, "Early 
English" oil style desired. Re-finishing, which might 
have forestalled the customer's dissatisfaction, proved 



ENFORCING THE BARGAIN 105 

ineffective as a remedy. The remainder of the shipment, 
meantime, was bundled under cover and forgotten amid 
a mass of other incoming goods. Ten days later the lot 
was unpacked and the dealer found that the seller had 
made an extremely undesirable substitution on the size 
of a number of dining room tables and the style of sev- 
eral chairs. So much time had elapsed since the receipt 
of the shipment that adjustment was difficult, and the 
dealer found himself loaded with a stock which he could 
not sell except at a price that ruined his chance of 
profit. 

Rigid inspection of goods when they are landed at the 
warehouse door would have protected this dealer from 
the mistakes of the supply houses, hastened adjustments, 
established his reputation among the factories as a buyer 
whose order must go out correct and would have warned 
him against suppliers who habitually blundered. In- 
deed, such inspection is the first simple rule to be en- 
forced by the purchasing agent if he is to get correct 
quality and quantity. 

IT" NOWLEDGE of supplier*' habitual method* it a 
lV big help to the buyer who desire* prompt shipment* 
the quick te*t by sample that simplifies inspection. 

If the seller, according to your experience from previ- 
ous dealings with him, is thoroughly honest, and his own 
inspection is careful and exact, you have at once a certi- 
fication of correct quality and quantity, which may 
render inspection in your warehouse less burdensome. 
After you have examined the first few boxes, the sales 
inspector's number on a pack of goods or a crate of 
peaches, will tell you how nearly correct the inspection 
of each package has been. 

In iron ore shipments the law of averages is used to 



106 PURCHASE SYSTEMS 

insure quality. The barge of ore is tested in a dozen 
places. Samples are taken now and then from fore, aft 
and midship, and from top to bottom as the buckets 
unload the cargo. The resulting mixture is tested to es- 
tablish the scientific formula for the entire shipment. 
Wise selection of samples may similarly be applied to the 
inspection of many kinds of goods. 

The quick test is, of course, the best, provided the 
average arrived at is accurate. A stenographer sat at a 
table counting out blanks of a certain kind and putting 
them in piles of one hundred each. An office boy who 
had handled poker chips, counted his first hundred and 
matched subsequent piles against it, judging the thick- 
ness of the paper to be uniform throughout. The supply 
buyer, on the other hand, knew that the paper in the 
blanks ran sixteen pounds to the ream, and he suggested 
weighing the sheets, hundred against hundred. A mo- 
ment's thought will tell you which method is quickest 
and most accurate. Quality and grade, number, quan- 
tity, measure or weight these are things to look for in 
your deliveries, and the quick test will relieve you of 
much tedious labor in the receiving room. Such a plan 
leaves ample time to study over the specials in each 
shipment, where errors are most likely. 

Rigid inspection and close checking is never to be 
mitted, but right buying should eliminate the necessity 
of inspecting every pound of screws, every ingot of steel 
or every bolt of cloth in a carload shipment. Correct 
order giving and clean-cut specification are the basis of 
delivery satisfaction. In former days a man could see 
his goods wrapped or packed, and so judged beforehand 
whether they met his needs. The method had certain ad- 
vantages which are absent from the modern system. The 
present-day purchasing agent often buys with reference 



ENFORCING THE BARGAIN 107 

to the character of the supply house, taking the evidence 
of his own experience with them as a guarantee of the 
goods. He avoids the firm which continually proves 
careless in the handling of orders, sends short weights 
or makes undesirable substitutions without sufficient 
grounds. His trade goes to the concern which supplies 
the right thing at the right time and at a reasonable 
price. 

Finding the sellers who give this quality satisfaction 
and efficient delivery service is one of the buyer's big 
problems. An electric motor maker repeatedly experi- 
enced difficulty in getting certain complicated stock cast- 
ings. Finally he happened upon a foundry foreman 
with the knack of giving correct service. Recognizing 
in this man his short cut to quality, the buyer gripped 
him fast. The foreman has changed employers three 
times, but the motor maker's trade has gone with him at 
every change. 

HOW the deter buyer it able to secure prompt delivery 
tervice and quality satisfaction on goods needed in 
a hurry follow-up methods that count. 

Once the order is given, your purchasing agent has 
four tools of follow-up : mail, the 'phone, telegraph and 
personal representative. The card index, or a carbon 
copy of the original order placed in a tickler file, serves 
to remind him of approaching delivery dates. 

A letter, sent a few days in advance of the time when 
goods have been promised, accents delivery specifications 
and makes a strong reminder at the critical date. One 
firm in a Southwestern city has for a number of years 
made successful use of double post cards for the first 
follow-up. This card requests the supply house to give 
information on the return portion of the card regarding 



108 PURCHASE SYSTEMS 

the progress of the work and the chance of delivery on 
the specified date. The reply is filed, and thereafter 
single cards remind the supplier of this date, which has 
become the foundation of the factory's work schedule. 
The underlying principle of "getting a date" is vital. 

Wisely used, the telephone is also a valuable means 
for hurrying up local deliveries, or long distance de- 
liveries of special importance. Coming in the morning 
when the foreman is planning his work for the day, a 
telephone message puts your need strongly before him. 
The intonation of his voice in reply is taken by one 
shrewd buyer as a sure indication of whether the sup- 
plier wishes to avoid the issue and intends delay, or has 
the date in mind and is processing his work promptly, 
so that the delivery will occur on time. 

In certain cases a telegram is better than either a 
letter or telephone message. An electric power concern 
was in urgent need of a big generator which was being 
built by an Ohio engine company. Every day for three 
weeks they sent a night letter to the Ohio concern in 
regard to the generator. The message arrived about eight 
o'clock each morning and was a "first column" reminder 
of the delivery date. The dynamo was out on the day, 
having received particular attention in a period of rough 
times when it might easily have been sidetracked or for- 
gotten. 

ABUSE of the fottow-up is sure to antagonize the 
supplier a reasonable and tactful approach, on 
the other hand, leaves him unlling to serve you. 

The same or even better results are obtained when 
one of your representatives visits the seller and urges 
the need for haste. 

"Get a good fellow into your supplier's shop, down 



ENFORCING THE BARGAIN 109 

among the actual cogs of processing your material. If 
you have the right man, your goods will come through. ' ' 
This is the way a purchaser of mine machinery and cast- 
ings sums up the value of the personal touch in follow- 
up the laugh and appeal of human comradeship. It 
eliminates the guess-work which enshrouds a message 
aimed at some indistinct figurehead a distant foreman 
or manager who thrusts the letter or telegram half-read 
into the waste basket and promptly forgets the telephone 
call. Personality puts the buyer, whether he is pur- 
chasing a machine which costs fifty or fifty thousand, on 
stilts in the crowd which is clamoring for deliveries. 

Above all, however, don't abuse the follow-up or 
maintain an incessant clamor for special favors. Actual 
need is the only sound basis of rush follow-up. You can 
shout "Wolf" until the seller learns to pay no atten- 
tion to your appeal. A twenty-dollar customer in Texas 
sent hurry-up wires "collect" to a St. Louis concern 
daily for a week and paid for them afterwards. Such 
a measure on goods ordered specially, but with no 
agreed shipping date, was tactless and set a discount 
upon his reasons in a genuine crisis which developed 
later. 

Reason and tact will do more every time than bull- 
headed demands urged in an unreasoning way. You 
must sell the sales office your need. A fifty thousand- 
pound generator in a city power house broke down and 
had to be replaced at the earliest possible moment, re- 
gardless of expense. A single telegram was the only 
follow-up used. This stated the case in a few crisp sen- 
tences and offered to bear 700 mile express charges. 
The wire carried conviction, and the generator came 
promptly. 

On the boundary between friendly and forced deliv- 



110 PURCHASE SYSTEMS 

ery rests the penalty inserted in the bonus contract 
clause. Since delay is tolerated by the supplier for the 
sake of economy, a bonus is the logical spur which in- 
duces him to make his deliveries more promptly. A fine 
of so many dollars for every day delivery is delayed 
beyond the stipulated date, coupled with a corresponding 
reward for earlier delivery, is valuable oil for the ma- 
chine of material-getting. 

Recourse to a lawsuit should be had only in excep- 
tional cases. Often the threat of proceedings is suffi- 
cient to bring the lax seller to time. No house can 
afford to run the risk of earning a reputation in the 
trade for slow deliveries or contract failures. 

The buyer in a big Pittsburgh steel company scented 
a rising market in bolts. He at once contracted with 
several rival salesmen for future deliveries, month by 
month. No concern was especially favored. The sales- 
men took the order, although against their will. On the 
third delivery date, however, bolts were so high and the 
demand for them so great that one concern yielded to 
the temptation to neglect delivery. 

Expecting this, the purchaser at once telephoned to 
the city sales department of the supplying house. The 
latter pretended a flaw in the contract as the reason for 
non-delivery. Instantly the buyer's coat was off. Backed 
by the plain intention of the contract and the whole 
fighting power of his house, he suavely suggested a court 
decision. 

' ' Now is a good time, ' ' he said, ' ' for us to demonstrate 
to the world whether your concern stands with the rest 
and respects its agreements on bolts and other items." 
The threat and the loss of reputation which would have 
resulted from a suit made the contract worth keeping. 

Having discovered the brand of poor quality in deliv- 



ENFORCING THE BARGAIN HI 

erics, the purchasing agent must determine what his 
stand shall be. He can be absolutely impartial and yet 
thoroughly resolute. If he is tactful, he will listen to 
the salesman's side before he lays down a harsh decision 
or makes a definite demand. The criterion of returned 
or discounted goods used by one conscientious factory 
buyer is this: 

' ' If the supplier has saved money beyond contract by 
throwing his goods below specification, or if the selling 
value of the goods has been diminished, an adjustment 
is due." 

Penalties are justly aimed not to punish, but to reform. 
The fundamental thing to aim at in your follow-up, in- 
spection and adjustment is to raise the standard of fu- 
ture service. To this end, you must demonstrate the 
justice of your present objection and your open-minded 
attitude toward tomorrow's deliveries. Inability or fail- 
ure to make an agreed delivery satisfactorily is inexcus- 
able from the buyer's point of view. The more just 
and firm you are in your demands the better will be 
the quality of service accorded you by the seller. 



hardest thing I know of in telling it to thov> a att- 
tamer that jirtt cost it not latt cott; to make him undtr- 
ttand that while the -price of tome goodt may be much lower 
in the beginning, they are alirayi ineariably dearer in the 
end; to thaw him that almott alvayt an article it worth jutt 
about what it eoett; in thort to imprett him with the meaning 
qf "quality" 

Edwin W. Moore 

FMfcteM. Th Electric C*M* 



XII 

HOW TO FILE PURCHASE 
DATA 

By O. N. Manners 

BEFORE the purchasing agent is ready to buy goods 
he must have certain information collected and 
classified in systematic form. Mechanical aids help tha 
man who is watching the markets when he wishes to 
spot the right seller on a hurry call for out-of-the-ordi- 
nary supplies, and they also keep him in close touch with 
his sources of regular purchase. Full and up-to-date, 
yet easily handled and thoroughly indexed these are 
the qualities needed in the buyer's information files. 

Such a system of records has been successfully built 
up by a commission agency engaged exclusively in buy- 
ing. The purchases which this firm makes for its cus- 
tomers covers a wide range of goods, each including an 
infinite variety of small articles and a great many prod- 
ucts that are continually fluctuating in price. The sys- 
tem used to supervise the buying details pf this busi- 
ness is simple and one which could easily be adopted by 
any firm making enough purchases to require a written 
record of quotations. 

Prices are secured from catalogs and quotations. 
For this reason price records are divided into these 
two classes. The catalog lists standard prices which 
rarely change. Quotations, however, are a different and 
more difficult proposition to handle. Records of prices 



PILING DATA US 



of special lines are kept on cards and are classified in 
two distinct sets. The first is for articles of special name, 
of which there is only one in a class. The second set 
is for articles in generical name, which are only distin- 
guished by special classifications. In the first set index- 
ing is carried out in several ways. The whole set is 
first indexed by means of a general alphabetical index. 
Then each section is given a special guide card on which 
is written the class of article. Where the variety of any 
of these classifications is extensive, a smaller alphabet- 
ical index again separates them. Thus, under the letter 
, there is a guide for extracts, and behind this again a 
separate alphabetical set of guide cards dividing the 
various extracts into alphabetical sequence. 

The indexing of the second set of cards, however, has 
to be carried out differently. The variety of the lines 
that come into this set is large, and if merely indexed 
alphabetically would surely take up a great deal of 
time in searching. These cards, therefore, are numbered 
and indexed in numerical order. A separate alphabetical 
index is provided in the form of a loose-leaf book. By 
this means it is possible to get a great variety of classi- 
fications of one line on a single page. This page form 
also facilitates reference, as it is simpler to note the 
classifications on the page and run the finger down the 
various lines than to search through two or three hun- 
dred cards. 

Each of the cards contains a full description of the 
article, and details of every quotation received. Many of 
the special lines are subject to modification at times, 
especially in their uses. This is especially the case with 
pharmaceutical products in course of development. In 
such cases all data affecting the product are collected 
and transferred to cards of a different color, and these 



114 PURCHASE SYSTEMS 

are filed with the price cards of the product, so that when 
purchases have to be made or shipments sent to a new 
buyer not likely to be familiar with recent developments 
in the use of the product, all the necessary information 
is at hand in serviceable form and comes up automat- 
ically with the price card. 

Standard prices listed in catalogs have also to be 
made accessible at short notice. To effect this the cata- 
logs are divided into two classes, those having but a 
few pages or which are in the form of flexible pamphlets, 
and bulky bound books. The first class is filed away in 
vertical files. The books are filed away on library 
shelves having dust-proof fronts. Each catalog is 
numbered with a bold printed number and indexed to 
firm names and articles. This catalog number is also 
noted on the price card so as to save time in referring 
to the indexes. 



'T'HE buyer is buying not to please those he deals with but 
* the millions of people all over the country and in foreign 
countries, who will eventually judge us by the personality of 
the buyer, worked out into goods for the home, the person, 
the dairy, the farm. He does not come in dirwt contact 
vrith these customers of ours but we wish he could. 

A. Montgomery Ward 

Founder, Montgomery Ward & Company 



PART III-HIRING AND 
TRAINING YOUR WORK- 
ING FORCE 

Team Spirit 

T^OSTER a spirit of team work. Upon that 
idea, Santa Fe success in handling its men i- 
based. By broadminded treatment of the meu 
on the job and by our reading rooms, enter- 
tainments and pension system, we try to make 
our men feel that they are members of a great 
family united not only in working hours, but 
in leisure time. 

Put confidence in your men. Aim to give 
them the highest ideals of private and railroad 
life. By making men better citizens you make 
them better workmen. 

Recognize merit. Promote from the ranks. 
Help your men keep out of a rut. Many of our 
executives have grown up in our service. 

At heart mo>t mm jiiv fair. They quickly 
respond to fair treatment and reflect it by their 
pride in their work. Behind the loyalty of Santa 
Fe men is team spirit, team pride and fair play. 





E. P. RIPLEY 

Prerident, At chiton, Topeka and Santa Fe Railway 



XIII 

WHERE TO FIND THE 
BEST WORKMEN 

By W. S. Ball 

HIRING men is the first step in managing men. 
Every large employer realizes this. He knows 
from experience that the superintendent who has the 
least trouble in handling his workers is the best judge 
when it comes to picking out new "raw material." It 
takes an ability which seems like instinct but which is 
more often the result of long training to size up appli- 
cants successfully or, when applicants are lacking, to 
know where to turn for good workers. 

The owner-superintendent of a small machine shop 
employing some fifty hands is famous among his ac- 
quaintances for the quality of the workmen he secures. 
He takes pride in the loyalty of his men, which means 
good products and easy sales. 

"Where do I find my men?" he said. "I don't. I 
grow them. I let my operatives do the actual bringing 
up. If you go through the plant today and ask every 
man how he happened to come to work for me you will 
find that at least fifty per cent of them are sons or 
nephews or cousins of older men, or of men who formerly 
worked here. 

"My rule is to give the preference to sons or near 
relatives of the men already here. I'll admit it is a rule 
that might not always work out well, but I know that I 



118 EMPLOYMENT METHODS 

am more interested in this business because my father 
founded it and left it to me. And I reason that when 
I have a workman who wants his son to follow in his 
footsteps he has pride in his work and is likely to pass 
the feeling on. 

"If it isn't a son, it may be a sister's or a brother's 
son. Practically every new hand I have taken on for 
ten years has been recommended to me by one of my own 
operatives. Sometimes they turn out badly, of course, 
but even in cases where the first few weeks are encourag- 
ing, I find that by speaking to the father or uncle, the 
beginner is toned up to our standard if he has any good 
in him at all. 

SYSTEM in the hiring of men is sure to bring you a 
better grade of employees some of the sources draum 
on by successful employers for their workmen, 

"My plant is small enough so that I know all the men 
personally. If one of them has a relative, or even the 
son of a friend, whom he wants to place with me, I en- 
courage him to see that the boy gets as much technical 
training in the schools as possible. Once I refused to 
take a boy until he had had another year in a technical 
high school. Inside of four years that boy became head 
of a department. There are objections, of course, to 
having too many family ties in a big plant. Ill feeling, 
based on the belief that there was favoritism, couldn't 
be avoided unless there was good team work. But in my 
own business I have found that it pays to pick out young 
men who have an interest in the plant already through 
fathers or other relatives." 

This is an unusual case, not applicable to most large 
factories, although the superintendent of a large print 
works admits that when he has a special position to fill 



LABOR SOURCES 119 

he invariably asks his own employees if they have any one 
in mind who is adapted to it In general, it is safe to 
say, the employer has no definite system of securing new 
workers. When times are dull he takes his pick of 
those who .apply. When work is plentiful he gets along 
as best he can through advertisements or various em- 
ployment agencies. 

And yet those who prove most successful in finding 
desirable men usually have some sort of system in their 
search, even though they themselves may not recognize 
it as such. Where skilled labor is required, this very 
largely resolves itself nowadays into a close watch of 
the many technical schools. The employing superinten- 
dent of a New England shop where highly specialized 
machinery is made, and where scientific management has 
been installed with marked success, says that most of 
his men, above the grade of bench workmen, are sought 
from the schools. 

"Every year," he said, "we have brought to our at- 
tention graduates of the technical schools, from whom 
we have plenty of choice. And we find that it pays to 
select them, because their own interest in the work is 
reinforced by loyalty to the school and the desire to 
make good for its sake. This applies as well to the boys 
who come from the public schools as to those with longer 
preparation. We employ the promotion system as far 
as possible, and many of our new employees are taken 
young, fresh from grammar or high school. If we get 
a boy from the technical high school one of his instruc- 
tors is pretty apt to drop around and talk with him two 
or three times a year to see how he is getting on. And 
this helps more than you would realize. 

"When it comes to still younger boys, office and er- 
rand boys, for instance, who are expected to develop 



120 EMPLOYMENT METHODS 

ambition to get into one of the high-paid departments, 
we pick the boy who goes to night school every time. If 
a boy has ambition and energy enough to work in the 
shop all day and go to school at night, he's got the stuff 
in him that we want in our business. Very rarely have 
I seen it fail that he is the boy who makes good." 

Sometimes the superintendent's system is the result 
of chance. A New England jewelry manufacturer, at a 
period when help was none too easy to get, dropped into 
the public library of his city in search of a technical 
volume. The library maintained a large industrial de- 
partment and encouraged workmen to use it as much 
as possible. While talking with the librarian he hap- 
pened to mention his need of a man for a certain line 
of work which involved a knowledge of designing. 

"There's a young man who comes in here who ought 
to suit you," said the librarian. "He's one of the most 
regular readers that we have. I don't know where he 
has worked, but he must be out of a job just now, for 
he frequently comes in during working hours, where be- 
fore s he came only in the evening. And I 've noticed 
that he is studying harder now than ever before, so I 
fancy he is putting his spare time to good advantage." 

The manufacturer promptly asked the librarian to find 
out if the man was available and to send him to the 
factory for an interview. It was a delicate task making 
the preliminary inquiries, but the librarian had come to 
be on good terms with the young student and learned 
that he was discouraged from frequent rejections at the 
shops where he had applied. She extended the manu- 
facturer's invitation to see him, with the result that one 
jewelry shop's most promising workman was landed in 
the particular job that fitted him. 

"Since then," adds the manufacturer in telling the 



LABOR SOURCES HI 

story, "I have left standing orders with the librarian 
that whenever she finds a case like that, where a man 
keeps right on studying all the harder when he's out of 
a job, to send him to me. If I haven't a place for him, 
I'll make one. There are always men enough in the 
shop who haven't that kind of enthusiasm. Once since 
then she has sent me a man, and while the results weren't 
as good as in the first case, he is one of my best workers. 
And I am hoping for more all the time." 

In an almost equally accidental way this same manu- 
facturer stumbled on a source of supply on which he has 
relied successfully many a time. In a community where 
jewelry making is one of the chief industries it is nat- 
ural that the fraternal bodies should include a large 
number of jewelers. A few years ago, when work was 
more plentiful than workers, he was in need of a man 
for a particular position. While discussing the difficulty 
of finding good men with one of his foremen the latter 
suggested that he knew a man in his lodge who had re- 
cently left a similar position, but was not the kind of 
man likely to go from shop to shop seeking work. 

LODGE MATES of your present workmen, green 
hands from the country, employment agency appli- 
cant* these are dependable tources of man tupply. 

A few questions decided the manufacturer to try him, 
and the result was a vacancy filled by a man who, though 
he never developed any great amount of initiative, is 
still holding the place satisfactorily. This experience 
opened the eyes of the manufacturer to the possibilities 
of the fraternal orders as recruiting stations for th<> in- 
dustrial field, and many of hia employees since then 
have been secured through recommendation by work- 
men who are lodge members. This has become so well 



122 EMPLOYMENT METHODS 

established, his shop happening to be one where condi- 
tions for the operatives are more satisfactory than in 
some, that he is rarely short of workers, no matter how 
busy the season. Fraternal men in his employ, seeing 
a vacancy, are quick to suggest a lodge mate employed in 
some other shop who would be glad to change positions. 

A western manufacturer who likes to "catch them 
young" and bring them up in the business has estab- 
lished a regular system which nets him two or three 
promising recruits every year. He comes from a country 
town where there are one or two small industries, but 
not very much incentive to an ambitious young man, and 
every summer he spends his vacation there. On each 
visit he makes it a point to look over the field to see what 
"likely" young men are looking for opportunities in a 
larger place, or have shown qualities that make it worth 
while to enlist their interest. It is easy in a small place 
to keep in touch with everybody worth while and to size 
up their possibilities. And it is a rare summer when 
he does not find one or two, sometimes more, who are 
worth securing for his plant. 

He takes them back with him in the fall, starts them 
at the beginning, and if they prove capable, sees that 
they get a chance to work through the different depart- 
ments, learning every angle of the business. These men 
prove among the best of his employees. He can rely on 
them personally and is sure that they have more than 
a paying interest in the enterprise. 

A well known New Yorker, the head of a large publish- 
ing plant, although he has no such system of gathering 
recruits, prefers men from the country, the "corn fed" 
variety, as he calls them. He himself is a native of one 
of the New England states, and likes to find youngsters 
from the same commonwealth, although country blood 



LABOR SOURCES 123 

from anywhere is almost sure to appeal to him. 

A textile manufacturer in New England combines this 
preference for country bred youths with a definite sys- 
tem for getting experienced men. Through various 
friends in several small textile plants scattered through 
the villages and towns he keeps in touch with promising 
subjects, and when he needs more help makes his first 
overtures to them. Often they are surprised that he 
should have heard of them, and this flattery puts them 
on their mettle to do their best for him. 

In securing unskilled labor for simple and quickly 
learned processes less pains have to be taken, but the 
employers who take the most care in picking their men 
almost invariably get the best results. And more than 
one superintendent holds his job by virtue of being a 
good "sizer-up" and knowing where to turn for extra 
workmen in an emergency. 

Some employers do not like to resort to the "help 
wanted" columns of the newspapers because the flood 
of applicants that results is a nuisance and there is al- 
ways considerable difficulty in selecting the right men 
from a long line of prospects. One Chicago factory 
superintendent, however, makes use of the advertise- 
ments of other employers. 

He is a quick judge of men and when he is in search 
of one he strolls down Fifth Avenue, where the after- 
noon papers come from the presses and a crowd of men 
are always eagerly scanning the want-ad sections. 

Among these he looks for promising individuals. Their 
general appearance, their clothing, their manner of go- 
ing at the task in hand, all contribute to his impression. 
Almost intuitively he selects those whom he thinks he 
could use. When he finds one he calls him aside and 
asks if he wants the job. Sometimes on talking with a 



124 EMPLOYMENT METHODS 

man, this employer finds that his first impression was 
entirely wrong, but quite as often it is confirmed, and 
this street corner conference determines him to give the 
man a trial. 

No method is likely to prove successful in the long 
run unless the employer using it has the important fac- 
ulty of sizing up other men correctly. 

A contractor found one of his best workmen by glanc- 
ing at the crowd of idlers gathered where an excavation 
was in process. The attitude and look on the face of one 
man appealed to him, and without further introduction 
he approached this man and offered work. The chance 
was eagerly taken and the man proved to be both efficient 
and ambitious. He was in every way satisfactory. 

''Since then," says the contractor, "like the man who 
has once found a purse in the street and forever after 
studies the gutters, I never pass a group watching build- . 
ing operations in progress without looking to see if I caa 
find another man who looks good to me." 



RESPONSIBILITY is what develops men and makes them 
broad and strong. It is a great creator of executive 
ability. When entrusted vrith it, candidates for promotion 
will show what is in them. Throw men on their own resources 
and see what they do. It is the petty cramping of the man 
that keeps down his abilities. Therefore, when you have 
faith that a man has sufficient knowledge of his business, 
begin by slipping out from under this or that responsibility 
and let it fall on the pupil. 

Clarence M. Woolley 

President, American Radiator Company 



XIV 
HIRING FACTORY HELP 

By Sutnncr B. Roger* 
Production Manager. Sangamo Electric Company 

JOB seekers, not more than fifteen years ago, made 
their headquarters on the street corners near the 
factory. There they waited for the morning whistle to 
blow, with the idea that it meant a job for those lucky 
enough to be selected. 

The man who hired the help would come out of the 
factory gate and, standing upon a convenient curb, box 
or barrel, would beckon first to one man and then to 
another and pass them in at the gate. Perhaps none of 
the men in the shoving group had ever worked for this 
concern before; perhaps they all had. It is safe to say 
that the man selecting help in this manner neither knew 
nor cared whether they had ever worked in that factory 
before. When he had picked out those whom he thought 
looked best, he went back to his duties and the crowd 
that was left ambled back to its resting place, the street 
corner or the nearby saloon. 

This was the general practice followed for employing 
men for the factory. By this crude method, it made no 
difference whether a man had any ability or integrity 
or whether he was stable enough to hold the job for 
which he was selected. If he was lucky enough to be 
picked out from the crowd, he was hired. 

Since that time, however, every employer of labor has 



126 EMPLOYMENT METHODS 

come to realize that this is not the efficient way to pick 
workers. Yet to get the most efficient man for any class 
of work is of vital importance to the economical and effi- 
cient operation of a factory. 

The old-time methods seem more crude by contrast 
with modern employment offices. Particularly interest- 
ing is the department which the Western Electric Com- 
pany, through long experience, has gradually developed 
to meet the difficulties of obtaining the best men for the 
work. Its methods are distinctive in two ways : 

First, in the physical method of handling the appli- 
cant. 

Second, in the clerical method of hiring and the care- 
ful consideration of the prospective employee's previous 
history. 

METHODS used by a big manufacturing concern to 
interview quickly and effectively a large number of 
applicants and secure the right employees. 

The employment department is divided into three 
main sections, one for the handling of shop men exclu- 
sively, one subdivided between hourly-rated women em- 
ployees, office women and salaried men, and one in which 
all records are kept. 

It has been realized that the attitude of an applicant 
toward the company and toward the job for which he 
applies is of the most vital importance, and, therefore, 
every means has been devised for the convenience of the 
applicant. Well-ventilated and well-lighted quarters 
have been provided for each class of labor. Here they 
may rest comfortably until they have been interviewed. 

In many cases the applicant has never been inside the 
works and the first impression he receives of the methods 
that prevail throughout the plant are formed by the 



HIRING FACTORY HELP 127 

treatment he gets when applying for employment. He 
may figure that if lax and discriminating methods are 
permitted in the employment department, they will UB- 
doubtedly prevail in all other departments, and surely 
in the one in which he will work. If he receives a nega- 
tive impression and yet accepts a position due to neces- 
sity, his tendency will be to use it as a temporary means 
of support until he can obtain a position elsewhere. 

The first physical means of separating the classes of 
labor seeking employment is made at the entrance. When 
an applicant enters the works, he is directed to the doors, 
which are located just inside the main gate. Entering 
the proper door, he finds himself in one of the receiving 
rooms, which are equipped with ample accommodations 
for filling in the necessary application forms. 

To prevent holding a large number of men or women 
for an unlimited period of the day, thus preventing them 
from seeking employment elsewhere if they cannot be 
employed by the Western Electric Company, a competent 
interviewer goes into each of the various rooms as soon as 
the office is open and, upon learning from each applicant 
the kind of work he is seeking, disposes of those apply- 
ing whom he cannot use by telling them at once that 
there is no work for them. To those he can use or may 
be able to use later he gives application blanks, request- 
ing them to fill out and hand them in as quickly as pos- 
sible. As soon as the application blank is filled in the 
applicant takes a seat at the side of the room until his 
turn comes for an interview. 

Should an applicant have difficulty in making out his 
application, he is given all the assistance he requires. 
The principal aim is to make the applicant feel that he 
has been fairly and well treated, that he has received 
the proper kind of attention and that he is perfectly 



128 EMPLOYMENT METHODS 

free to call again and just as often as he may wish. 

Just outside of the shopmen's room and just inside of 
the general office are the interviewing desks. As each 
man 's turn comes, he steps through the doorway directly 
in front of the interviewer, who is a specialist in this 
line of work. His application is analyzed and he is es- 
pecially interviewed as to his past business experience 
and then told the nature of the job that is open and 
what it will pay. If he accepts, he is given a pass that 
will admit him the next morning to the department for 
which he has been employed. If he declines the posi- 
tion, or if he is rejected, he passes out at once to make 
room for the next man. 

At this particular step a great deal depends upon the 
interviewer; he must know men and he must be thor- 
oughly familiar with manufacturing processes, as well 
as able to make fine distinctions in trades. This inter- 
view must of necessity be short, but the one cardinal 
principle of it all is civility. If the applicant is not 
hired, but is a desirable employee to keep in touch with, 
his application is taken and it is explained to him that 
as sopn as an opening occurs he will be communicated 
with, and, therefore, it would be well for him to keep the 
company notified of all changes of address. 

This application is carefully filed in a cabinet under 
classified trade or work headings, such, for instance, as 
clerks, bookkeepers, accountants, mill-wrights, machin- 
ists, tool-makers, and so on. As soon as a man is needed 
in anyt of these branches of work, these applications are 
very carefully gone through and the most desirable appli- 
cants selected from them and sent for. 

If he is hired, his application goes through the regu- 
lar routine and is finally placed in what is known as the 
"live files." The applications of employees who have 



HIRING FACTORY HELP 129 

left the company are placed in the "dead files" for po- 
aible reference later. 

Men seeking salaried or office positions enter the em- 
ployment department through the "Office Entrance," 
and pass down the corridor to the room designated "Sal- 
aried Men." Here the same general routine is followed 
as carried out with the shop men, except that the appli- 
cant receives a personal interview from the managing 
head of the employment work. 

Should the applicant be a woman seeking a salaried 
position, she enter; the door marked "Office Entrance," 
and passes down the corridor to the room designated 
"Salaried Women." She is interviewed in an adjoining 
room, and the same routine is followed as with the sal- 
aried men. 

Women for factory work pass through the entrance 
marked "Entrance for Shop Women," to the room as- 
signed for this class of Lelp, where the same methods 
are employed as in the other departments. 

A man looking for a special interview for a position 
such as production engineer, assistant superintendent or 
master mechanic is conducted by the watchman in the 
vestibule of the employment department directly to the 
office of the managing head of the employment depart- 
ment Although this special interview is given, if he 
wishes to be considered as an applicant for a position, 
he must file an application, giving a record of his past 
experience, the same as all other applicants. 

The works' legal department, occupying desks in the 
office of the employment department, handles the legal 
phases of the employment work, such as garnishments, 
salary loans, apprentice contracts, and so on. 

Employees from other departments requiring infor- 
mation or data from the files pass through the "Office 



130 EMPLOYMENT METHODS 

Entrance," down the corridor and into the general 
office of the employment department, without passing 
through any of the rooms in which the applicants are 
located or coming in contact with them in any way. 

The department is supplied with daylight from two 
large skylights, as well as side lights from two sides of 
the building ; in addition to this, an almost perfect sys- 
tem of artificial lighting has been provided in the event 
of any necessity. 

Drinking fountains and lavatories are installed at con- 
venient points. The windows of the employment depart- 
ment are all of such a height that it is impossible for 
any one to see in from the outside, thus insuring the 
degree of privacy that is required. 

The entir2 -equipment has been installed for the pur- 
pose of attracting desirable people, making them com- 
fortable while it may be necessary for them to wait for 
an interview, treating them civilly when being inter- 
viewed, providing for the health and comfort not only of 
the high-grade engineer or office man, but of the office 
boy, shop man and shop woman alike, making no dis- 
tinction between them except that distinction that makes 
them happier and better pleased. 

On an average, twelve thousand people per month, or 
about four hundred and fifty applicants a day, are in- 
terviewed quickly, efficiently and satisfactorily, and the 
advantages gained by the arrangement have more than 
justified the expense and outlay required to establish 
this department of the work. 



"CTFICIENT and high priced labor only results when the 
^ latent natural ability in men is developed and utilized 
by careful selection and training. 

W. L. Saunders 



XV 

HOW WORKMEN ARE 
FITTED TO THE JOB 

By Henry Beach Needbam 

TRAINING men for business is a time-worn specialty. 
But in all of this "educating" there is a varying 
degree of altruism and little real business. There is 
practical business and a surprising amount of altruism in 
the twentieth century training in business. The reason is 
that it pays. When a corporation that sells sixty-five 
million dollars of its product annually, provides a year's 
training within its organization to a large group of 
young men, receives practically no labor return during 
the period, and yet pays them a living wage while they 
are learning the business, that corporation must place 
great value on training men in business. 

In the Western Electric Company, for instance, col- 
lege men receive what amounts to a credit for their 
academic work. That is to say, the college trained man 
is taken into the student course, which occupies the first 
year of his service with the company, and during that 
time he is paid an average of twelve and a half dollar? 
a week. The non-college man is not admitted to this 
course. He must get his training as best he can, taking 
his chances with the men who are similarly unqualified 
and, in the last analysis, with the collegian. 

The collegian engaged by the Western Electric Com' 
pany is carefully selected from a large list of candidates. 



132 EMPLOYMENT METHODS 

During his training in the organization the student re- 
ceives ten dollars a week. 

The student course has been worked out with much 
detail, even down to days and half-days. A large part 
of the business of the company is the manufacture of 
telephones and telephone supplies. Therefore the student 
is first instructed concerning the telephone industry its 
beginning and development. 

ACTUAL shop practice is supplemented by lectures 
and class-room work in one large concern which 
employs a number of untrained college men each year. 

Then follows a day's inspection of the plant at Haw- 
thorne. Next, there is a half -day's lecture on the work 
of the general/ manufacturing department and its rela- 
tions to other general departments, its organization and 
its integral divisions. This information is conveyed spe- 
cifically by taking a piece of apparatus which is to be 
manufactured and explaining how it passes from one 
department to another. 

Next comes the question of the raw material the 
value, the purchase and the inspection of the basic 
product. The half-day's lecture covers not only this, 
but the work of the assembly department, final adjust- 
ing and inspection, shipping and, at last, the installing. 
This is followed by a visit to the company's telephone 
exchange, with general instruction on the functions of a 
telephone exchange. 

At this point the students divide one set receiving 
training for the manufacturing production, inspection 
and installation departments of the business; the other 
group receives training designed to fit the men for com- 
mercial work. 

When all of the students have completed both courses 



TRAINING WORKMEN 183 

they are assembled for a general discussion of the works. 
Following this, they spend two weeks in the inspection 
department office. Next they are engaged for twelve 
weeks in general installing work. The students are di- 
vided into "gangs" and are sent out with the regular 
workmen whose business it is to install the equipment 
of telephone exchanges, or to put in place and make 
ready for operation the switchboards in offices, hotels, 
clubs, and so on. 

The student now has in examinations a forceful and 
probably an unpleasant reminder of his college days. 
But it is only a one-day test. He must prepare a paper 
reviewing the work of about six months. This is not 
merely a recital of what he has seen and learned. He 
must record his impressions. 

The examination paper is a factor in determining sev- 
eral things. To the student the most important of these 
is his tenure of service with the company. For his 
" period of probation" is over. Does the company want 
him permanently in its organization? Does he like the 
work and does he want to stayt These questions are 
answered at this time. Either the student leaves to seek 
employment with some other company, perhaps in a less 
technical industry, or he casts his fortunes with the 
Western Electric. Incidentally, his weekly honorarium 
of ten dollars is increased to fifteen dollars. 

Now, follow the college man who is to make his voca- 
tion "selling goods." 

The "students' six-month commercial course for col- 
lege graduates" is planned for the "purpose of training 
men for the sales department, instructing them in the 
manufacture, the stock material and the distribution of 
telephone supplies." The first eight or ten weeks are 
devoted to following up customers and stock orders, 



134 EMPLOYMENT METHODS 

from, the time they are filed until shipment is made or 
the goods are sent to stock. This is called "chasing," 
work which familiarizes the student with the routine of 
an order and with the importance of exactness. He ob- 
tains a clear idea of the apparatus in process of manu- 
facture. This experience is not without its peculiar 
value. Foremen with whom the college men deal in 
this kind of work are busy men and, as a rule, do not 
have the patience to answer the many questions of the 
novice. They are normally of the opinion that the work 
under them is going forward with all possible speed, and 
to be asked by a "college student" to hurry up a job 
does not meet with an enthusiastic response on the fore- 
man 's part. Therefore, in this business of ' ' follow-up, ' ' 
the student must exercise tact, sometimes diplomacy. 
If he is successful, he has made a good beginning in the 
difficult task of handling men. 

When the student has become an expert chaser he puts 
in four weeks in the apparatus store room, from which 
parts are drawn for assembling in the switchboard de- 
partment or for shipment on ' ' customer orders ' ' to tele- 
phone exchanges throughout the world. In the filling 
and checking up of these orders, the student handles ap- 
paratus of almost every description. Thus he becomes 
familiar with the finished product of the shops. The 
arrangement of the stock is an important factor of the 
business to master. This applies not only to the smaller 
apparatus in the racks and bins, but to "packed stock." 
Material which will be least called for must be so dis- 
tributed that it need not be continually overhauled when 
apparatus for which there is a constant demand is drawn, 
and if the student gets this into his head, he will have 
obtained a knowledge necessary to be a warehouse in- 
spector. 



TRAINING WORKMEN 135 

The service department is thv, next "laboratory." 
Each branch house has in this department its own repre- 
sentative, who keeps a record of the orders from his 
respective branch. He files the "promises of delivery" 
received from the output department and notes all short- 
ages. All correspondence, either from the customer or 
from the branch house is handled by the service depart- 
ment. By this method the exact condition of an order 
is known by the seller and the buyer. 

The law of supply and demand is shown in its prac- 
tical workings in the stock maintenance department. 
Studying the stock records, not only of the previous 
months, but of the preceding years, the student learns 
that during established periods there is an increased de- 
mand for certain kinds of apparatus; for example, dur- 
ing July and August the orders for heat coils, protectors 
and fuses are ten times greater than in the winter 
months. By learning how to schedule stock orders on 
the shop so as to keep the supply on a par with the 
demand, and to avoid "over filling" or running short 
on the stock, the student is in a position to "keep the 
stock" of a branch warehouse, or, for that matter, the 
regular stock supply of the Hawthorne works. 

HPRAINING in ihop work it etttntialfor the man who 
M. it to tell good* at well at for the man who intend* 
to devote himtelf tolely to manufacturing. 

Mistakes are unavoidable in the best regulated busi- 
nesses, and for their adjustment there is the claims de- 
partment. In his work in this "laboratory" the student 
handles all complaints from customers. When parts have 
been overlooked, although the orders have been shipped 
as complete, the matter must be investigated, the over- 
sight charged to the proper department, settlement made 



136 EMPLOYMENT METHODS 

with the customer, or, where the customer has no fair 
basis for complaint, the claim dismissed. The policy 
of the company is "a satisfied customer," and the stu- 
dent learns to get at the customer's viewpoint. 

The billing section next occupies the student's atten- 
tion. Here he examines the method of shipment from the 
shops to the customer, or to the branch warehouse, to- 
gether with the routing of carload lots and single orders. 
A short period of time is also allotted to the cable, in- 
sulating and rubber plant. The student sees the pure 
rubber washed, mixed and rolled, preparatory to the 
making of receivers and mouthpieces for telephones. 
"Wires of different kinds are insulated, covered and at- 
tached to plugs for switchboard cords, or they are woven 
and baked and then drawn for underground or sub- 
marine cables. Distributing rings and various other 
switchboard supplies are insulated in the cable depart- 
ment. 

Through the commercial course the company's idea is 
to afford the student every possible opportunity to in- 
vestigate "manufacture" and "method." With the 
knowledge thus gained, with the training thus afforded 
him, the student is presumed to have the proper founda- 
tion to make himself a valuable employee in the branch 
house service the selling end of the business. Then he 
learns how to sell goods. 

Before the director of the educational department 
makes his annual tour among some forty or fifty col- 
leges and universities the managers of the branch houses 
send in their requisitions for men. For example, the 
manager of the Seattle branch writes the director that 
he will need two additional men on his staff a year 
hence. It is the business of the director to fill these 
requisitions. He carefully selects his "raw material" 



TRAINING WORKMEN 137 

from the available supply of college men. He supervises 
their basic training in the business. Then he sends them 
out to the branch houses and the local managers put the 
finishing touches on their commercial education and fit 
them into subsidiary organizations. This training applies 
to college men only. 

I OW a manufacturing concern ettablithed an evening 
11 training school which vxu vxll attended by employee* 
and brought excellent result* in efficiency. 

In another concern, a large hardware house, the secre- 
tary was desirous of helping young men to help them- 
selves, and he believed in personal contact. He began 
by inviting a few of the promising young men of the 
organization to his home evenings. Non-college men were 
included in the invitation. On these occasions he dis- 
cussed with them problems of practical business in which 
he and they were engaged. One night in every week 
was devoted to this "get-together" function, at which 
the employer was guide, philosopher and friend. So 
popular did these gatherings become that the library in 
this home could not accommodate the young men who 
were willing to devote time outside of long business 
Lours thus to increase their own efficiency. The in- 
structor and the students began to meet at the store one 
evening a week, and from this was developed what was 
first known as the "school of salesmanship." 

The "fetish of names" at first proved a handicap. 
With few exceptions, every young employee became ob- 
sessed with a notion that the place for him was "on the 
road." Reports of what this or that salesman was mak- 
ing in the matter of commission raised the hopes of many 
a young fellow who was in no wise fitted for the art 
of salesmanship. The name was changed to the "hard- 



138 EMPLOYMENT METHODS 

ware ' ' school. Immediately there was a falling off in the 
number of students. Men who handled hardware from 
early morning until five-thirty o'clock at night lacked 
inspiration to continue the study of keen-edged tools 
after hours unless they were exceptional young men. 
But in the end the company was embarrassed because the 
number was so large. 

Men are still taught salesmanship in the school. Often 
experienced salesmen who have served long on the road 
and who, with advancing years, are permitted to live at 
home and occupy a desk at the store, or those who have 
completed a trip and are back at headquarters, give prac- 
tical talks to the students. 

The more progressive manufacturers and jobbers to- 
day are committed to the policy of training employees 
under the company's guidance and control. This policy 
is fast spreading in the retail trade at least, among 
the large department stores. Attention, service and 
value that is what the buying public, alive to what it 
wants and what it is entitled to, is demanding more 
and more; and department store owners and managers 
appreciate the necessity of training the selling force to 
meet this demand, in so far as their work can meet it 
to be intelligent, courteous and, to the greatest possible 
degree, "error proof." 



the individuals of a business house are thinking 
beings and should work freely as a co-ordinate whole, 
they must work also together they must be molded into a 
tmoothly running, precise machine. 

John V. Farwell. 

President, John V. Harwell Company 



XVI 

MAKING THE BOY A 
BETTER WORKER 

By L. I. Thomaa 

A REGULAR piece of work was submitted to a 
Chicago printing establishment with the request 
that they give an estimate of the time it would take an 
experienced workman to do it. They agreed that if they 
had a man who could do the job in six hours they would 
be perfectly satisfied. An apprentice in this plant com- 
pleted the job in a little over four hours. 

This boy had been taken fresh from school at the age 
of fourteen and was being taught the printing trade in 
a school for apprentices. Would such an efficient job 
have been done by the boy after the same period of 
service if his printing knowledge had been gained by 
picking up what he could learn here and there, as is 
the case where no system of training is in force? 

The average boy of legal working age leaves public 
school with his working certificate in his pocket, a con- 
fused mass of facts and figures in his head and a pair 
of soft, unskilled hands, utterly unfitted for any prac- 
tical work. Such a youth is not worth twenty-five cents 
on the dollar, and the most pitiful part of it is that he is 
not to blame. In attempting to make himself of par 
value this youth will lose job after job, although perhaps 
striving with all his honest efforts to fit himself for the 
place in which he has landed. 



140 EMPLOYMENT METHODS 

The most adaptable period of his life, the years in 
which he might be laying the secure foundation for some 
trade or business, developing character, earning steady 
wages and acquiring loyalty both to his trade and his 
employer, are spent as a chance messenger or errand 
boy, or hanging around the streets or pool rooms. 
Many of these boys want work and need it. Industrial 
education is solving the problem in many instances. 
Authorities feel that learning only a part of a trade is 
one of the chief disadvantages of many present-day ap- 
prenticeship systems, that establishments have become so 
large and have so many departments that the time of the 
apprentice is fully employed in mastering details of one 
department to the exclusion of all other departments. 

A PPRENTICESHIP systems of the old-fashioned 
iV kind are rapidly giving way to training schools 
which avoid specialization evils by all-round preparation. 

The old-time apprenticeship system, except in a very 
few cases, has disappeared within the last thirty years. 
Toward the latter part of the time the system was still 
in operation there was such a demand for men that a 
strong tendency existed to use the apprentice as an op- 
erator long before he was thoroughly versed in all phases 
of his trade. As a result of this state of affairs, the 
apprentice started out as a rather poorly equipped 
journeyman. 

Manufacturers found themselves seriously hampered 
by a lack of skilled workers. So many of them have 
established apprenticeship schools. Training in these 
schools differs from that furnished by the old apprentice- 
ship system, in that the object in view is to give the 
boys instruction in such subjects as mathematics, mechan- 
ical drawing, and so on, necessary for a more rapid 



DEVELOPING BOYS 141 

advancement in their trade, as well as in the complete 
practical training. Instead of being "bound out" to 
some man, as formerly, each apprentice to a different 
man, one skilled employee have charge of the boys and is 
tlu-ir instructor. 

The term of indenture is generally four years. The 
boys are taken from their shop work and required to at- 
tend the school a certain number of hours each week. 
At the completion of the term bonuses of varying 
amounts are generally given. As a rule, lesson sheets 
prepared by instructors take the place of text books, 
these sheets closely following the work which they are 
performing in the shop. 

This modern system has an advantage over the old 
one because greater care in laying out courses and care- 
ful watch of shop work enable the boy to get in a shorter 
period of time the fundamentals that go to make him 
a skilled workman. 

In a large Illinois factory employing several hundred 
men the employers were many times greatly annoyed in 
trying to secure adequate help. They finally decided to 
open a school for apprentices in their own plant. This 
school was organized along lines that met the demands 
of both employer and apprentice. It has the follow- 
ing advantages: first, it is within the walls of the 
plant; second, the boy is learning a definite trade and 
becoming versed each day in its needs and possibilities; 
third, the work is just what he will have to do when he 
graduates ; fourth, he is under the constant supervision 
of an instructor. 

Besides being taught the trade, the boy continues his 
school studies under competent instruction, being taught 
the things that are most applicable to the business and 
trade, and studying half a day in the school. He works 



142 EMPLOYMENT METHODS 

the other half day in the shop, thus immediately becom- 
ing a wage earner. 

A special room is provided for the school. One part 
is equipped as a modern school room and the other part 
as a model workshop. 

The general academic instruction is similar to that 
carried on during the first two years of a high school 
course, but those studies or parts of studies which bear 
directly on the business are particularly emphasized. 
For instance, arithmetic is reviewed from the factory 
side. A specially applied arithmetic, much condensed as 
compared with the ordinary text book, has been pre- 
pared, and bookkeeping, algebra and geometry are 
similarly taught. 

To be admitted to the school a boy must be a grammar 
school graduate between fourteen and fifteen years of 
age ; his school work must show good standing, and if it 
is deemed necessary, he must pass a physical examina- 
tion. He must have good moral character and be desir- 
ous of learning the trade. His parent's or guardian's 
promise to cooperate with the company in looking after 
his welfare is also secured. 

Although application is generally made by letter, both 
the parents and the applicants are finally interviewed 
personally. If all is satisfactory the boy is given a fair 
trial, and if both parties are then satisfied a two-year 
pre-apprenticeship agreement is signed. During this 
time the firm offers to teach the boy, with the provision 
that if he is satisfactory to the employer he shall con- 
tract for five additional years as a full apprentice in 
such department as the firm deems best suited to his 
ability. The parents must agree that the boy shall 
remain until the trade is learned. 
Monthly reports inform the parents of the boy's 



DEVELOPING BOYS 143 

progress, conduct, adaptability, improvement and effi- 
ciency. At the end of the pre-apprenticeship period, if 
his work is satisfactory, he is taken on for a full five* 
year apprenticeship term, at the end of which time he 
is a finished workman. 

T NTELLIGENT direction of the boy't e/orU along 
1 practical lines gives him a broader ricic and make* 
him a workman rather than a mere machine. 

Pre-apprentices whose average standing for six consec- 
utive months is 95 per cent or above, are given a bonus of 
$24 semi-annually in addition to their regular wages. 
When the apprentice begins the second year of his regu- 
lar apprenticeship one dollar each week is deposited to 
the joint account of the firm and the apprentice. This 
sum is paid at the end of the term as a bonus for good 
work and is no part of the regular wages. Two weeks' 
vacation on pay is allowed each student whose average 
standing is 95 per cent or above. 

The agreement guarantees to the boy steady employ- 
ment at a regular increase of wages and a chance to 
learn a complete trade from A to Z under competent and 
careful supervision. The boy realizes that promotion de- 
pends upon himself and that he must do work up to a 
certain grade. 

Actual factory methods are taught and the apprentice 
is accustomed to factory work. He works side by side 
with experienced workmen. In the school a thorough 
training in English, applied arithmetic, elementary 
science, mechanics and applied art is given. The library 
includes standard literature, trade journals and the 
latest catalogs. The object of this course is act only to 
develop first-class workmen, both in theory and prac- 
tice, but to provide eaaili apprentice with a general, 



144 EMPLOYMENT METHODS 

practical education that will fit him for his duties as a 
reliable, broad-minded citizen. 

In some concerns it is the practice to apprentice the 
boy, not to the journeyman master, as in the old appren- 
tice system, but to a department,, the foreman of which 
is supposed to look after the boy. In one factory, in order 
that the foreman's time may not all be taken up with 
instructing, a training room has been established. The 
principal machine tools in this room are placed under 
the direct charge of a practical mechanic and his assist- 
ant. These instructors tell how and why the work is 
done. The boy is taken directly into the training school 
and serves a period of two months under observation and 
instruction. While he may be willing to become a 
mechanic, the firm wants to find out if there is a 
mechanic in him. If he stands the test he engages on a 
period of four years' apprenticeship, receiving fair 
wages, which are increased each year, with a bonus of 
$100 at the end of his term. 

These boys do actual work that would otherwise have 
to be done in the shop. They do more. When an ap- 
prentice has mastered one branch, he is not allowed to 
take up the next step until he has broken in a young 
apprentice who has just come. 

Such team work gives excellent results. A large num- 
ber of apprentices are handled with few journeymen in- 
structors. While the training produces specialists even- 
tually, they are "all around men" first. 

In one company the general supervision is entrusted 
to a wise, practical, fatherly man, who has passed the 
most cf his life in the service of the company. The boys 
are also carefully watched by each foreman and records 
kept of their progress and efficiency. A boy whose 
record for both shop and school shows a standing of 95 



DEVELOPING BOYS 145 

per cent is given a handsome cash bonus at the end of 
his apprenticeship. If he shows a better standing than 
95 per cent and seems to have executive tendencies, he 
is given a double cash bonus. Should he happen to de- 
velop extra adaptability along certain lines, the com- 
pany gives him, at its own expense, training at some 
first-class technical school, working one week in the 
business and one week in the school. 

One factory, which has had several years' experience 
with an apprenticeship school, claims to have had but 
two boys who ever "went wrong." Their graduates 
develop into upstanding, practically educated, loyal, re- 
liable young men who make the best of citizens. 



T? VERY ONE trAo employ $ labor knotr* that torn* men 
can do tiro or three time* at much work in a day at 
others. Thit it not to much physical capacity at it it a 
certain native ability in the man which enable* him to get 
ouicker retultt than hit fellow. He may u*e lett exertion, 
he may teen hare lett general ability, but he know* how to 
separate the chajf from the wheat; he teemt adapted for that 
datt of work in vhich he it enoayed and kit productive 
capacity exceed* that of hit neighbor. 

W. L. Saunders 



XVII 

HIRING AND TRAINING 
OFFICE HELP 

By Marshall D. Wilber 
President, Wilber Mercantile Agency 

TO MY mind, hiring an office boy is just as im- 
portant as engaging a chief clerk," said the office 
manager of a well-known concern. "And it might be 
considered even more important, because the right kind 
of a boy, trained right, has greater possibilities and may 
in time prove more valuable to the firm than the older 
man. The office boy of today may be the executive ten 
or twenty years hence. ' ' 

Any office manager who has once had a really good 
office boy appreciates his value and knows that it is 
worth while to go to some trouble in finding and train- 
ing this employee. Ordinarily the best boys are those 
who come from families of the middle class and from 
homes where they have learned the importance of hon- 
esty and obedience. Those who contribute at least a 
part of their earnings to the family support are most 
satisfactory. 

Boys about fourteen are most suitable, because if they 
are older than that they are inclined to feel above their 
work, while younger boys seldom have the requisite edu- 
cation. Demand a. thoroughly good knowledge of read- 
ing, writing, spelling and arithmetic. But even more 
essential than the education already possessed, look for 
the ability to pick up duties quickly and the ambition 



OFFICE WORKERS 147 

to develop as a business man and win promotion. 

Choosing and hiring, however, are only the first steps 
in handling an office boy. He must be developed by the 
office manager or others who direct him. This necessi- 
a thorough understanding of the boy himself and 
square treatment of him at all times. More than almost 
any other employee in the office, the boy is affected by 
the treatment accorded him, for he is just at the age 
when his character and habits are most subject to out- 
side influence. 

/~\FFICE boys should be selected with care and trained 
V_x trith a new to hating them assume larger rerponsi- 
bUitits how to select good stenographers. 

Comparatively few office executives seem to realize 
the value of having a thorough understanding with all 
their employees, even to the office boy. When he is 
engaged he should be told clearly just what is expected 
of him and what he may expect from the firm. There 
can be no better way of handling him than by giving 
him specific things to do and impressing him with the 
fact that he alone will be held responsible. If his duty 
is to carry notes and papers between different depart- 
ments of the office, show him that that is a division of 
work which he alone has in charge. If he is stationed 
at the information desk to receive and report visitors, 
impress him with the fact that he is in a way a depart- 
ment head, an executive on a small scale. This can 
scarcely fail to prompt him to do his very best. 

More than this, however, a boy should understand that 
the firm is anxious that he should fit himself for some- 
thing better. Prom the very beginning he should be 
given all the help and encouragement possible. No 
office manager can make a mistake by getting acquainted 



EMPLOYMENT METHODS 



with his office boys and making them feel that he has a 
personal interest in them and their success. A kindly 
word of greeting in the morning, or an occasional com- 
mendation when work has been well done will go far in 
inspiring the boy's interest in the work of his employer. 

The hiring of a force of stenographers differs from the 
engaging of most other office employees, in that a cer- 
tain degree of efficiency is required of the beginner. In 
selecting a stenographer from a number of applicants, 
little can be judged except from recommendations based 
on past work and the apparent ability of the candidate. 
Test letters at the time of the first interview are of little 
value, except to show how efficient the applicant is in 
grammar, spelling and punctuation. The average appli- 
cant is inclined to be nervous on taking first dictation 
from any one, and no candidate should be refused simply 
because of failure to take dictation correctly at the first 
endeavor. 

Probably no quality in a stenographer is more appre- 
ciated than absolute secrecy with respect to the affairs of 
the firm. The average employer wants the particulars 
of his business never to go outside his office door. The 
most desirable stenographer will always show the great- 
est discretion in keeping to herself even the most trivial 
details concerning her employer's affairs. 

Every executive should train his stenographer to be, 
in fact, a private secretary, to take care independently 
of the details of his work. Some employers do not realize 
how much of their work could just as well be turned 
over to an assistant. 

Some executives answer only a very small percentage 
of their letters by personal dictation, turning the great 
mass of them over to a stenographer with brief instruc- 
tions as to how each letter should be treated. This not 



OFFICE WORKERS 140 

only relieves the executives of a great deal of detail work, 
but develops stenographers and fits them for higher posi- 
tions. 

The executive who has a number of stenographers in 
his department cannot be too careful in seeing that they 
are given a square deal and that each one is suitably 
promoted or given better pay as ability warrants. A 
firm's reputation with respect to its treatment of its em- 
ployees travels fast and once a concern is known to ill- 
treat its stenographers, it cannot hope to have their en- 
thusiasm in its work or get the best service from them. 
Frequently trouble or lack of fairness among the stenog- 
raphers is due to enmity on the part of some sub- 
executive. 

"My youngest stenographer, Miss McGuire, was re- 
ported by my head stenographer as not making good," 
said the manager of an eastern concern, "and I adver- 
tised for her successor. The advertisement called for an 
experienced stenographer and typewriter capable of 
handling correspondence and of acting temporarily as 
office manager. I signed it with a newspaper number. 

"In the first twelve hours I got 156 answers. Some 
were written with pen and ink and on the stationery of 
the most expensive hotels in town. Others were badly 
spelled or sloppily typewritten. One applicant sent a 
carbon copy of a letter originally dated 'Nov., '06'; the 
date was crossed off and the new date inserted in pencil. 
One envelope had a special delivery stamp on it and had 
been mailed before 9 o'clock the morning the advertise- 
ment appeared. It was from Miss McGuire. 

"It was a clean-cut business letter and closed with the 
sentence, 4 My reason for wanting to leave my present 
employer is that there are three stenographers ahead of 
me and I am not getting a square deal from the head 



150 EMPLOYMENT METHODS 

stenographer. I could make good right here if I was 
willing to squeal to my employer. Kindly consider this 
confidential and oblige, very truly yours.' 

"Inside of a week I had the tangle straightened out 
and had discharged three stenographers. Miss McGuire, 
with one assistant, is now doing the work that the bunch 
were doing before." 

CARE needs to be exercised in hiring office clerks 
qualities required for the position and the kind of 
man best fitted to perform the work. 

In no class of employees is it more difficult to get com- 
petent men than in office clerks. Clerical work demands 
a number of qualities almost impossible to judge until an 
applicant has been tried out in his specific work. Mod- 
ern business done under high pressure demands absolute 
exactness in all its records and reports. Hence the good 
clerk must have a combination of speed and accuracy. 
Every large business must have a department devoted 
simply to the correction of errors in its records of trans- 
actions. The man, therefore, whose figures can be de- 
pended upon is welcome in any accounting department. 

There is a notable tendency on the part of extensive 
employers of clerical help to enlist their men from the 
ranks of college graduates. In many business offices 
there is a prejudice against the college man because, it is 
said, he considers himself too good to begin at the bottom 
and work up. Statistics, however, show a large per- 
centage of college men in clerical positions and the great 
majority of them are making good. 

One manufacturing concern in the middle west 
adopted the policy of starting a number of young college 
men in its offices each year at nominal salaries and ad- 
vancing them as their ability became evident. The 



OFFICE WORKERS 151 

records of this firm now show that over 90 per cent of 
these men made good, as compared with 10 per cent of 
the non-college men who were taken in under similar 
circumstances. Today a majority of the executive 
officers of this company are college graduates and the 
engaging of college men in all departments has become 
a fixed policy of the firm. 

When applicants are being considered for clerical po- 
sitions or other departments of office work, the employer 
can ordinarily depend more on the general past asso- 
ciations and training than upon particular evidence of 
ability at the time of his interview. Influences of early 
life go far toward laying a foundation for future de- 
velopment. This is particularly evident in the case of 
men who spend their early life on farms or in small 
towns and villages. This does not infer that city-bred 
men are incompetent, but simply that records show the 
greater percentage of success on the part of the country 
boy. The country youth, while he may be inexperienced 
in the line he undertakes, is not afraid to work. He is 
honest, loyal and willing to start on a small salary and 
ordinarily his habits are good. These are the prime 
qualities you need in any office employee, qualities that 
will make the new recruit in a few years one of your 
trusted executives. 



A LL the great creators of the vorld hate planned out their 
*" crrationi to the tmallest detail; all great achifttmentt 
hate firit exiited in the mind of tome man. 

Clarence M. Woolley 



XVIII 

BUILDING UP A RETAIL 
SALES FORCE 

By C. M. Jones, 
Formerly Superintendent, The Fair, Chicago 

IN A retail establishment the superintendent should 
hire all but the lowest grades of employees himself. To 
handle such work, which in the course of two hours 
may demand interviews with between one and two hun- 
dred applicants in order to select twenty, he must be a 
keen judge of men and women, an observer of human 
nature. This ability requires long experience in han- 
dling men and detailed information regarding the needs 
of the store itself. 

It is valuable to have applicants fill out the usual ap- 
plication blank giving their name, address, previous 
employment and employers, and references. Aided by 
his observation of an applicant's personal appearance 
and general make-up, a shrewd observer from wide ex- 
perience with this class of people can read in a few 
written facts the history of an applicant. He is forced 
to rely principally upon these facts. The references can 
only be looked up after the applicant is hired, and are 
chiefly of use for verification. 

It is not the best policy to ask written answers to ex- 
haustive and intimate questions. They can be secured 
in the course of a short conversation almost without the 
applicant's knowledge. Applicants object to answering 
in writing inquiries regarding their family history, their 



STORE EMPLOYEES 



153 



EMPLOYMENT APPLICATION 



( IN full NO """' 



HO T OCHftcO- 



.TCICPMONC. 



N*TION*IIT< . 



_M*MMiio on 



PUVIIC CMOOI.. 

MIGM CMOOl_ 
COlLCGC 



ir 8O. GIVf NAUKl ANO ftITinM 

POSITION THC Lf MOTH Or TOOK I MPlOTMf NT WITH CACM 'WITH OATtSI AND TMC HEACOM 
rOH LEAVING CACM imTAT WITH THf IAT riMM OU WOKHID WITM AND STATE TO OATCI 

ftCFCRENCCS 
NAME Aoonimm 



FORM I: It u dffirable to have a* much information at ptunble about 

tack applicant for a position. Question* covered by thi* form an not too 

pcrtonal, yet are luflicicntly eompnkmnft 



154 EMPLOYMENT METHODS 

circumstances, living expenses, and so on, because they 
think an employer has no right to ask them. They do 
not understand that you ask because you want to know 
whether they can live on the wages. 

Competition demands that we pay what the labor is 
worth, not what the laborer is worth. A girl earning six 
dollars a week may be capable of filling positions which 
pay ten dollars, but as long as she is filling the six dollar 
position her work is worth only six. It is our advantage 
and duty to put her in the ten dollar class as soon as 
possible. In common with all employers who wish tc 
build up an efficient force you often pay more than the 
competitive price, when you know that an employee can 
not support himself and those dependent upon him on 
the standard wage for no employer can afford to have 
employees so underpaid that they must seek outside 
sources to eke out a necessary income. 

When a man is employed, it is wise to send him first 
to his department head for instruction in his specific 
duties. If a salesman, he should study the stock behind 
the counter sufficiently to present it to the customer. 
The department head and the assistant superintendent 
can keep their eyes upon employees, especially the new 
ones, and be ready to answer questions regarding the 
stock or give detailed instructions in regard to the goods 
and the finer points of salesmanship. 

METHODS of employment and training followed by 
a large retail department store to secure efficient 
and loyal employees judging the applicant quickly. 

A series of lectures will help when instructing em- 
ployees. They can be delivered informally during the 
dull hours of the day. They usually treat of some phase 
of salesmanship or individual betterment, and if the 



STORE EMPLOYEES 155 

lecturer is a regular employee of the store, they will be 
particularly strong, since his regular work enables him 
to draw his suggestions and illustrations from the life of 
the store itself. The lectures may be written along gen- 
eral lines laid down by the superintendent and revised 
by him. The lecturer can be admitted into conference 
with the department heads or officials, so that he may 
understand the points on which the superintendent is 
working and grasp the needs of the store. 

A feature which will bring good results is the intro- 
duction of special salesmen, or men and women ex- 
perienced in retail selling. They walk about the part of 
the store assigned to them, and when they see a dissatis- 
fied customer or a salesman in difficulty, go to the rescue. 



FORMER EMPLOYEE 


S RECORD 


NAME | ENTERED 


NUMSCR | LAST DAY WORKED 


ADDRESS 




RECORD OF SERVICC 


CHECK CAUSE LEFT 


ABILITY 


RESIGNED 


DEPORTMENT 


LAID OFF 


WORK 


DISCHARGED 


IS THERE OBJECTION TO RE-EMPLOYING? 




REASONS FOR NOT RE-EMPLOYING 


CLASS OF WORK PERFORMED 


EDUCATIONAL WORK OONC 


SCC FILE ENVELOPE 


SIGNED 



FORM II: Concise information hen yittn tettt the ttory of each part 
employee, and it invaluable tcforMMT re-employment it under consideration 

Very often they succeed in making a sale when a cus- 
tomer has left the counter without buying. 

Accurate records of each salesman's time and his 
weekly sales are worth keeping. Yet these black and 



156 



EMPLOYMENT METHODS 



white records are not, after all, the more important 
elements in the handling of employees. The impression 
that the clerk makes personally upon the employer is 
really most significant. For this reason the personal 



NOTICE OF EMPLOYMENT 



EMPLOYMENT REQUISITION 

DEPARTMENT DATE 



WORK TO BE DONE 'STANDAROIZATH 



OCPT ME 



MALE OR FEMA 



LEAVING NOTICE 



REASON FOR LEAVING 



FILLED BY NO. 



RECORDS MADE BV 



ENVELOPE 



FORM III (back card) : This slip is sent to the department head. FORM 
IV (middle card): Requisition for help placed by the department manager. 
FORM V (front card) : Notice of an employee leaving is given on this card 



touch between the two, the human side of their relation- 
ship, is to be particularly emphasized and developed. 
Encourage all employees to come to the superintendent 
at any time, and never allow him to refuse an interview. 
Let clerks take care of the records written facts are 
dead, and cannot be stimulated. Use personal contact 
and knowledge of an employee with the records to fall 
back upon urge the superintendent to spend three 
hours a day in his office, six around in the store among 
your employees > you have no superintendent, go 



STORE EMPLOYEES 157 

yourself. A man looks different at ten in the morning, 
filing an application for a position, with his best clothes 
on and his best foot forward, than at four o'clock in 
the afternoon, leaning over a counter. 

Sometimes able work may be rewarded with an im- 
mediate increase in salary from the superintendent. In 
some instances department heads recommend a raise, but 
usually the employee will ask for it before its necessity 
becomes altogether plain to his superior. This is to be 
encouraged, not frowned upon. Very often the increase 
is justified and in any event it is well to know what a 
clerk thinks of his position. It is better to go to the 
trouble of convincing him that he is receiving what he 
deserves, as shown by his sales record, than to have him 
brood into chronic discontent. 

Suggestions as to changes in stock, or in management 
details, may profitably be invited from your salespeople. 
They can be required whenever goods are asked for 
which the store does not carry or has not in stock, to 
make out a special report. 

If you lead an employee to feel that his side of the 
question his opinion, his suggestion is going to be 
considered and to know that his relations with his em- 
ployer are those of one human being toward another, 
you have done much to make him contented and effi- 
cient. 



CHOW me a house vhere all the employee* are educated 
^ to think kindly of the customer*, to that in speaking of 
them even they use courteous phrases, and I can tafely pre- 
dict for that house a rapid and continuous success so long 
as that policy prevail*. 

Daniel Louis Hanson 

SlM Mu*r. Tht Ptdml Conpuy 



XIX 

LEGAL POINTS IN HIRING 
AND DISCHARGING MEN 

By Arthur E. Goddard 
I 

PRACTICALLY every man in the business world is 
a party to one or more contracts of employment, 
either as employer or employee. Thousands of such con- 
tracts, oral or written, formal or informal, are made 
every day, usually with little care and consideration and 
very seldom with a definite knowledge of the legal effect 
of the transaction. 

There are generally few questions of importance which 
arise in connection with the employment of ordinary 
"help." Applicants answer an advertisement in the 
newspaper ; they inquire ' ' at the office ' ' and ' ' begin work 
next Monday" at so much a day or week. The hours of 
work and other small details are either understood or 
quickly arranged with the superintendent or foreman, 
and a simple daily or weekly contract of employment has 
been made, terminable by either party at the end of any 
day or week, as the case may be ; and, in the absence of 
express agreement or firmly established custom, termin- 
able at the end of such a period without notice. In 
general, little attention is ever paid to the fact that 
there are actually laws governing these matters. 

Although the same general legal principles apply to 
the case of clerks, stenographers, bookkeepers and other 
subordinates employed by the week or month, yet on 



LEGAL POINTS 1.,!) 



account of the greater dignity of their office and the 
closer personal relation with their employers, custom and 
perhaps to some extent law require a rather more cere- 
monious treatment of their relationship than in the case 
of an ordinary workman. 

In this country they are rarely employed by the year, 
although of course there are exceptions. From the na- 
ture of their employment they are generally held to be 
employees either "at will" that is, dischargeable at 
any time without notice or at most employed by the 
week or month, dischargeable at the end of any week or 
month as the case may be without notice and without 
cause. The contract comes to an end at the expiration 
of each such period and either party may decline to re- 
new it for any reason or for no reason at all. 

/CONDITIONS of employment when the employer 
\*s may discharge a man and for what duration of 
work what tpecificationt to make in the contract. 

An employer has the absolute right to discharge for 
late arrivals at the office, early departures, relatives' 
funerals and other interruptions in the service whether 
attributable to long evenings the night before, baseball 
games in the afternoon, or even actual illness. 

There is another sort of employment of more impor- 
tance because of its longer duration and the greater 
amount involved. In this class belong managers, super- 
intendents, executives, editors, and a host of other em- 
ployees ranging from traveling salesmen and bookkeepers 
to railroad presidents, who hold office under a more or 
leas permanent tenure and whose compensation is politely 
called "salary" instead of "wages," 

If the contract of employment is to last for a longer 
period than one year from its date, it must be in written 



160 EMPLOYMENT METHODS 

form, either in a series of letters or otherwise, and 
signed by the party who is to be bound or his authorized 
agent. If this is not done, the contract is absolutely 
void under the Statute of Frauds. 

Even if the contract is to run for one year or less, it 
is vastly better to have all of its terms in writing so that 
nothing will be left to oral understanding. A difference 
as to one or two words of the agreement may involve an 
entire year's employment. 

There is no general rule in this country, as there is in 
England, that an employment for an unspecified time is 
employment for a year. Here an employment for an in- 
definite time is one at will; that is, either party may 
terminate it at any time without notice. On the other 
hand if the words or acts of the parties, or the circum- 
stances of the employment, show an intention to make an 
agreement for a year, they will be bound for that length 
of time even if the employee is to be paid at the rate of 
so much a month, or even a week. 

For instance, the owners of a hotel wrote to the man- 
ager of a hotel in a distant city offering him a position 
as their manager at a salary of $200 a month with rooms 
and board for his family. He accepted the offer and 
brought his family with him. He was discharged after 
a few months and sued his new employers for the balance 
of a year's salary. They defended on the ground that 
his employment was paid by the month. The court held, 
however, that on account of the nature of his employ- 
ment, taken together with the fact that he was known to 
have a large family and had brought them from a dis- 
tance of hundreds of miles, the parties must have con- 
templated a year's employment at least, and the ex-man- 
ager won his case. 

The provision that the employment is to continue so 



LEGAL POINTS 161 



long as the employee proves "satisfactory" is to be 
avoided by an employee who needs to make sure of a per- 
manent position so long as he does good work, since in 
general when this provision is inserted, the employer is 
made the sole arbitrary judge as to whether the work is 
satisfactory. It is advisable to have all such matters 
settled and in writing. 

In the absence of a special agreement, no notice is 
required of either party in this country. Either may 
end the employment upon the very last day of the term, 
whether it be by the week, month or year. As notice 
is often desirable, it should sometimes be provided for 
in the contract of employment. 

Unless the contract provides that this notice may be 
given by mail, it should be delivered to the other party 
in person, preferably in writing. 

In one case in New York an actress had been em- 
ployed for the season, unless her employment should be 
terminated by two weeks' notice. Instead of delivering 
the notice to her in person, her employers posted it 
upon the door of the green room, as was their custom. 
It was a simple matter for the actress to testify that she 
did not see this notice and of course the jury took her 
view of the matter. 

If an employee is allowed to continue in the service of 
his employer after his contract of employment has ex- 
pired, the contract is automatically renewed for another 
year, month or week, according to the length of the term 
of the original contract. For this reason, unless the 
parties intend to renew the entire contract, they should 
make a provision for such a continuation, either in the 
original agreement or at the end of the term. 

The employer, however, has several causes for dis- 
charging an employee. In addition to the case of illness 



162 EMPLOYMENT METHODS 

or disability mentioned above, he has the right to dis- 
charge for any misconduct, inattention, carelessness, un- 
faithfulness, dishonesty, or insubordination, which does, 
or may, tend to injure the interests of the employer. 
Whether they are of sufficient importance or not, de- 
pends somewhat upon circumstances. In an actual case 
it was held that a superintendent with large discretion- 
ary powers, with authority over many subordinates, and 
having charge of a great mass of business detail, should 
not be held to the same exact obedience in a trifling 
matter as an ordinary clerk. 

An employee who is discharged and wishes to contest, 
should be careful not to acquiesce in the discharge any 
further than to leave. His acquiescence may release his 
employer from all liability. If the discharge is not abso- 
lute, the employee should tender his services until they 
are refused. 

Wrongfully discharged, an employee may require his 
former employer to make good any loss of salary, but he 
is bound to seek other employment of the same kind, in 
the same general locality, and must deduct his earnings 
from the damages. He is not bound, however, to accept 
employment of a substantially different kind, nor to ac- 
count for what he may earn " after hours" in his new 
employment. 



'T'HE executive must also be an inventor: he, too, studies 
* out a working machine, where all the parts are to work 
in harmony to produce a given result; but he deals not with 
inanimate material, but with men with wonderful possibilities 
and initiative to help or hinder the working of the great 
organization. 

James Logan 

Chairman, Executive Committee, United States Envelope Company 



PART IV-HANDLING 
AND PAYING HELP 

Working the One Best Way 

I ) EALLY efficient labor can only be obtained 
and continuously maintained when the three 
following conditions are fulfilled: 

That the method of working is the best we 
ca.i devise; 

That the workman is trained to become ex- 
pert in following that method; 

That he is rewarded liberally for success. 

If these three conditions are intelligently 
adhered to, the employer can pay his workman 
higher wages than any union will ask. 

We all know that unless workmen are trained 
alike, hardly any two will do the same piece of 
work by exactly the same method. There is a 
best method of doing everything, but we seldom 
arrive at it without careful study. As a matter 
of fact, the only way to find the best way of 
doing a piece of work is to analyze it into its 
elementary operations and determine separately 
thf IM >t \\;iy of doing each element. We can 
then find the time needed for each element and 
hence the total time required. 





H. L. GAXTT 

Engineering and 

Management Cim 



XX 

PLANS AND CONTESTS THAT 
INCREASE EFFICIENCY 

Hy William Hamilton Hurqucst 

OI'II clerks are getting stale," admitted the junior 
partner, snapping a rubber band around a piti- 
fully small bundle of sales slips. He was store super- 
intendent, and part of his job was to keep the clerical 
force "up to concert pitch." 

"They are stale," declared the senior partner with 
a frown. He had been tempted by the unusual values 
of jobbers, and had loaded up with "mill-ends." These 
goods were now the drawing-card at the "mill-end sale" 
an annual institution, the purpose of which was to in- 
duce buyers to visit the store during the dull season 
of mid-summer. 

The "opening" and the first week had broken all rec- 
ords in the matter of attendance. Customers flocked to 
the store. But with a taste both economical and dis- 
criminating, they confined their purchases almost wholly 
to the bargain counters. In other departments the 
women merely "shopped" stopped, looked, gossiped, 
and took samples. The store was profiting not a penny 
from the sale. For this, the proprietor knew, the clerks 
were in a large part to blame. Their mental attitude, if 
put into words, would have been translated thus : 

"The boss oughtn't to expect us to sell goods at this 
time of the year. It's trying enough, goodness knows, 



166 PAY ROLL PROBLEMS 

to be polite to customers in this hot weather." 

"How about a prize contest?" suggested the junior. 
They argued the matter long ; finally, like a flash, came 
the inspired idea. 

"Let's offer vacations on full pay," the junior pro- 
posed, "to every clerk who increases her sales a certain 
percentage over the 'mill-end' of last year. We needn't 
make the increase over twelve per cent to move every 
special you've bought and cut a big hole in our regular 
stock. To keep everybody on the jump till the gong 
rings, we'll also promise three round-trip ticket to Chi- 
cago as extra prizes for the three high scores, and ten 
dollars in gold to the man or woman who makes the 
biggest individual increase. That'll make 'em wake up 
all right!" 

VACATIONS on full pay offered by one concern to 
all employees who increased their sales by a certain 
per cent livened up the summer dull season. 

The senior partner objected. He didn't believe in va- 
cations had never taken one in his life other than trips 
to buy goods. 

"We can spare half our people next month," the 
younger man insisted, "if only to keep them from 
getting lazy and bored. But we '11 profit on the deal. To 
earn a vacation a clerk will have to make money for us. 
And we'll have a force in the fall with plenty of snap 
and ginger." 

He had his way. Details were worked out then and 
there, and marks set for clerks less than a year in the 
firm's employ and for others whose records had been 
satisfactory. Announced next morning, the newspapers 
devoted considerable space to the contest. 

In the store an instantaneous change took place. 



EFFICIENCY CONTESTS 167 

Every clerk was charged with energy. Real salesman- 
ship was devoted to listless bargain-hunters and sample- 
takers. Patient urging brought out the needs of each, 
both current and future ; then the remnant or article to 
satisfy such needs was dug out of the heterogenous stock. 
To reach possible buyers who did not appear, clerks 
wrote memoranda on postal cards furnished by the store, 
calling attention to special bargains, and mailed them to 
their special customers. 

From front door to alley, from basement to roof, the 
store vibrated with vitality, and hummed with energy. 
After eight days of the contest, it become evident that 
every clerk in the store would qualify for the vacation 
with pay. The senior partner smiled as he telephoned 
for supplementary bargain lots to fill holes in the stock 
and provide the force with "something to sell" during 
the grand wind-up. The race for the round trip tickets 
and the added prize money became more engrossing 
every day. 

The net gain over the preceding year was more than 
thirty per cent. More important far was the dynamic 
energy and added efficiency gained by the clerical force 
through rest and recreation unhampered by any worry 
over loss of wages. 

Vacation contests have become a settled policy of the 
store. Moreover, the plan has been extended to cover 
the entire year. Each month, the three clerks with the 
highest selling records are given a day off, with a free 
junket to the state capital where they visit the big shops 
and attend the theatre at their employer's expense. To 
equalize chances, the departments are grouped in three 
divisions, the groups changing as they enjoy seasonal 
advantage. 

When the old-fashioned methods failed to work in 



168 PAY ROLL PROBLEMS 

this case, a specific plan was devised to meet the emer- 
gency. You can try something of this kind in your 
business, or "follow the leader" in other ways set down 
here and secure top-notch efficiency. All that is needed 
is an appreciation of conscientious effort. In any com- 
mercial undertaking, latent ambition, the spur of com- 
petition and the human and harmless hunger of em- 
ployees for pleasure, can all be coined into extra divi- 
dends. 

DISTRIBUTION of business literature, free scholar- 
ships at technical schools and cooperative schemes 
are some of the methods which increase efficiency. 

Offering good "business literature" to employees 
giving the books away, not circulating them, is the 
method used by the general manager of a big machinery 
house. He presents his salesmen, both in the house and 
on the road, with books on salesmanship and kindred 
subjects. He gives free subscriptions to magazines on 
business and selling to new salesmen. 

"Our men seem glad to read these books and maga- 
zines. In several instances, notable improvements in 
salesmanship have been secured. There are many sales- 
men, naturally shrewd and business-like, who lack finesse 
and the potency of personality which grips a customer's 
favor. The literature we distribute deals with practical 
matters; the cultivation of personal appearance, good 
manners, the proper inflection of voice and such details 
in a salesman's make-up that go to make him interest- 
ing." 

Another aid to superior salesmanship is found in 
snappy, business lectures, "live-wire" talks at regular 
meetings at the main office of a company. By one large 
firm of wholesale grocers, this is considered a great in- 



EFFICIENCY CONTESTS 169 

c-ntive toward top-notch effort. There is an annual 
gathering of road salesmen from all. parts of the country. 
Several evenings are devoted to the discussion of matters 
of general interest. 

The executives and heads of departments give instruc- 
tive talks. New ideas are taken up and considered from 
the salesman's viewpoint, as well as the manager's. 
Withal, the amount of good fellowship brought about 
and the degree of enthusiasm promoted, constitute a 
source of great satisfaction to managers and officials. 

A unique and desirable form of rewarding high grade 
work is the donation of free scholarships in technical 
schools. The chief executive of a western house manu- 
facturing electrical appliances tried various schemes to 
speed up individual employees. All were unavailing, 
however, until he tried the scholarship idea. His ex- 
planation is that he made the mistake of watching the 
advance of all his men. After he had concluded that the 
majority of his men were going back, he found that it 
was only relative, and that, as a matter of fact, the great 
mass of the men were turning out just as many ma- 
chines per capita as ever. Deciding to try something 
new, he sent ten men who had shown consistent ad- 
vances to a technical school, paying their tuition and al- 
lowing them an average wage, for a special four weeks' 
course. 

"The boys immediately woke up," he testifies now. 
"The competition was strong. Month after month five 
men were given this opportunity for special instructions, 
and the plan resulted not only in a largely increased gen- 
eral improvement, but in developing several extra-good 
designers, foremen and constructors who have been given 
new positions and higher salaries. Both old and young 
are eligible to this course of instruction. Our oldest em- 



170 PAY ROLL PROBLEMS 

ployee was one of the first to win a course and made a 
creditable record at this school." 

Coming now to a consideration of real profit sharing, 
the results achieved by one of the greatest of wholesalers 
are noteworthy. For the last five years, the pay of road 
salesmen has been based, not upon gross sales, as was 
the old plan, but upon the net profit realized. Not only 
are prices better maintained, but expense accounts are 
kept down. 

"Our general scheme of paying road salesmen on 
what they make and not on what they sell is logical, fair 
and shrewd, ' ' says the president of the company. ' ' The 
man who went out merely to sell $250,000 worth of goods 
in a year, cared little what price he got. He made con- 
cessions too freely, and kept the average gains too low. 

"Under our present plan the compensation of the 
saleman bears a direct relation to the profit on his busi- 
ness. "When selling a merchant a mixed bill of dry 
goods, therefore, he resists the temptation to overload 
his customer on low priced lines because the additional 
items will bring him (the salesman) no additional profit. 
All the salesmanship he possesses is concentrated on the 
higher priced lines. This is profitable to the house, and 
in consequence pays the salesman better. 

"Formerly, too, a salesman's expense account was al- 
ways high. Under the new system the items come out 
of his own pocket and he is concerned about the odd dol- 
lar he used to toss to the porter. It has a positive value 
to him at the end of the year. 

Cooperation makes the employee a vital part of the 
business. He is both worker and part owner. Taking 
the good men into partnership was Andrew Carnegie's 
pet hobby. An establishment in which all skilled em- 
ployees were partners as well as workers would come 



EFFICIENCY CONTESTS 171 

very near solving the labor problem. And the standard 
of efficiency would seldom fall below that of the largest 
active stockholder. 

4 'Pay 'em and drive 'em!" was the eighteenth century 
rule. Profit sharing and stock distribution have become 
the ideals of the twentieth century. Between the two 
range various plans all with the single purpose of 
securing greater efficiency among employees. If dealt 
with broadmindedly, and with some small degree of 
altruism, the human element in a business undertaking, 
regarded as an unstable factor, may prove to be a handle 
of opportunity in securing larger and better results, 
rather than a daily handicap and source of embarrass- 
ment. 



BUSINESS it not entirely a matter of dollars and emit, 
' of organization and method*, of routing and detail. 
The more scientific business become*, the higher the plane 
to which it develops, the more 100 mutt realize that business it 
human that the personal touch it the strongest bond beticeen 
the parties to commercial transactions that man-power it 
tai influential element in business. 

William Judaon 

Proldnt. JadKM Grocw 



XXI 

PAYING DIVIDENDS TO 
OFFICE WORKERS 

By Kendall Banning 

WITH forty average employees in their offices, the 
owners of a thriving eastern business undertook 
two years ago to develop a livelier interest in the detail 
work of the departments. Profit sharing was taken as 
the basis, and a plan was worked out which gave each 
individual a share in the profits commensurate with his 
services, and a chance to enjoy a practical interest in the 
business itself. After two years' trial, the success of the 
experiment is beyond question, and the methods seem 
applicable to the solving of some of the stubborn prob- 
lems in management which every office is obliged to 
meet. 

The owner of a business is naturally more concerned 
with its success than a mere employee. Its growth adds 
to his labors, but its profits add to his wealth. Mistakes 
are paid for out of his pocket, and its progress or failure 
carries him along. It has been aptly said that "a busi- 
ness is the lengthened shadow of a man." To a peculiar 
extent, a man's business is a reflection of the individual 
himself, and its character, its methods and its develop- 
ment are determined by the personality which directs it. 

To the average employee, a "job" is a means of liveli- 
hood. Under ordinary conditions he will develop that 
job until it becomes more valuable both to the business 



SHARING OFFICE PROFITS 173 

and to himself. In many positions, however, especially 
those of a clerical nature, the workers fall into a me- 
chanical routine which deadens their initiative and tends 
to keep down the quality of their work to a common- 
place mediocrity. It was to avoid just this condition 
that this particular office organized an employees' co- 
operative association which has stimulated the entire 
organization, has materially increased the efficiency of 
the workers, and has added to their salaries by a system 
of cash awards for special services and money-saving 
suggestions. 

T)Rf)FIT sharing and special prize* for time and 
JL labor-taring device* have been uted to develop keen 
interest and high efficiency in one big office. 

Every employee is a member of the association. The 
association has a chairman, vice-chairman, secretary and 
treasurer, all of whom are elected by the members them- 
selves to serve for a term of one year. Each member 
pays a monthly due of one quarter of one per cent of his 
or her salary. These dues make up a loan fund for the 
assistance of any member who may be in need as a result 
of illness or other emergency. When the fund reaches 
the sum of $1,000, dues are discontinued until they are 
needed again. 

The association holds two regular meetings each 
month. The "business meeting" is devoted to the affairs 
of the association, the election of officers and the dis- 
cussion of business short-cuts and other suggestions made 
from time to time by the various employees. They are 
held on the second Monday of each month. The "edu- 
cational meetings" are held in the office immediately 
after office hours on the fourth Monday in each month. 

At each of these "educational meetings" an official 



174 PAY ROLL PROBLEMS 

of the company or other business man addresses the 
members on some subject pertinent to the business, and 
one of the employees is designated by the chairman to 
describe in detail his or her part in the day's work. A 
regular schedule of these talks is kept and each member 
has his turn to make a talk. 

Other members are also expected to offer any sug- 
gestions they may have for the facilitation of the work 
described. Such suggestions are not discussed immedi- 
ately, but are held over for consideration at the next 
meeting. In this way each employee is made familiar 
with the details of the business. It is often found that 
much time may be saved by transferring some work from 
one person or department to another which may in some 
way be better equipped to handle it, and in case of the 
absence of one of the employees, to distribute his tasks 
among others and thus prevent the work from getting 
behind. 

The profit-sharing feature of the association is ar- 
ranged on a dividend basis. At the end of each year, 
every employee is given a bonus equal to a certain per- 
centage of his or her yearly salary. This percentage is 
based on the profits of the business for the year, and is 
determined by the executive officers of the company. 
Last year, in addition to salaries, $2,000 was distributed 
among the members of the association as a bonus, on the 
basis of six per cent of the yearly salary of each em- 
ployee. 

When the association was organized, a system of merits 
and demerits was inaugurated. These merits and de- 
merits are based on a unit of five dollars and are credited 
to or deducted from the amount set aside for the bonus 
at the end of the year. Last year, the merits exceeded 
the demerits, and the bonus was increased one and one- 



SHARING OFFICE PROFITS 175 

half per cent, making it seven and one-half per cent of 
the salaries. One clerk, who drew a salary of $1,000 a 
year, received in addition a bonus of seventy-five dollars, 
while stenographers who make eighty dollars a month 
got a bonus of seventy-two dollars. Five per cent of this 
is paid at Christmas and the balance on demand after 
the first of the year. 

The merit system affects each worker's pay. A merit 
is awarded to any one who suggests an acceptable 
"short-cut" in business, or any system which will save 
time, labor or expense in any branch of the business. 
The name of the employee to whom the merit is awarded 
is posted on a bulletin in the office, together with a de- 
scription of the improvement suggested. This bulletin 
is counted as a roll of honor, and the services noted are 
recalled when promotions are made. 

The largest merit was fifty dollars for a suggestion 
made by the assistant treasurer for the simplification of 
one of the complicated details of the business. Formerly 
the checking department kept large .books of checking 
sheets where the record of each customer was maintained. 
It was necessary for the accounting department to wait 
until the end of the month, then transcribe the records 
from the checking sheets, in longhand and turn them 
over to stenographers to be typed for billing. As a 
result of this cumbersome system the accounting depart- 
ment fell behind more than a month on the books and a 
corps of public accountants was called in. The account- 
ants installed an elaborate system which did not prove 
effective, as the same delay recurred in less than three 
months. 

Then the employees got together and worked out a 
plan whereby the two departments were practically com- 
bined. Several changes were made in the checking sheet. 



176 PAY ROLL PROBLEMS 

and a form was designed for an itemized bill to cor- 
respond to each checking sheet, and to be commenced the 
first of each month. These bills are so designed that 
certain figures, which must appear in the office duplicate, 
can be detached from the original, by means of perfor- 
ated margins, before sending them out. The bills are ar- 
ranged in the same order as the sheets in the checking 
books, and original, carbon and duplicate are held to- 
gether with paper fasteners. At the end of the month 
it is now necessary merely to fill in the total space and 
rate columns and the bills are ready to be sent out. The 
improvement meant a saving of several hundred dollars 
annually. 

A WARDS are open to all employees,from office boy to 
* treasurer demerits against entire departments for 
individual delinquencies stimulate team spirit. 

Another typical award of merit was made to a young 
fellow who had just been advanced from office boy to as- 
sorter of newspapers. This boy's duty calls for the as- 
sorting of a large number of newspapers, which are 
placed in tall stacks and passed to the checker. The 
papers were returned to the assorters in all sorts of 
shape ; frequently the stacks had fallen over and it was 
necessary to spend a great deal more time in sorting 
them again before filing. 

One evening, at home, this lad made a wooden box 
about three feet deep and proportioned to hold the 
largest newspaper folded twice, with a slot down one 
side about four inches wide and extending to the bottom. 
Several of these boxes are now in use; the papers are 
sorted into them alphabetically and the boxes are passed 
on to the checkers, who in turn check the advertising 
and drop the papers in reverse order into another box. 



SHARING OFFICE PROFITS 177 

This keeps them straight until they are returned to the 
sorters for filing. It is necessary then only to transfer 
them from the boxes directly to the files, saving a great 
deal of time and labor. 

Another example of the value of the organization to 
the company is furnished by an instance when a twenty- 
five merit was awarded to a clerk for suggesting a com- 
bination voucher check which is found to save hundreds 
of dollars annually. Formerly, in sending out checks, it 
was usually difficult and frequently impossible to get 
back the receipted bills. Much money was spent for this 
purpose in postage alone, as it was necessary in all 
cases to place the receipted bills in the hands of clients. 
By the use of a special voucher form, it is only neces- 
sary to fill out both check and voucher and send them to 
the debtor. He must sign the receipt before the bank 
will accept the check. The bank returns the cancelled 
voucher-check and the receipt portion is detached and 
sent to the customer. 

Similarly, merits are awarded not only for short-cuts, 
but also for special work which increases the efficiency of 
the organization or shortens the regular work. The five 
dollars thus earned is not paid to the individual but 
credited to the funds of the association and all the mem- 
bers profit in proportion to their respective salaries. 

An extra bonus of five merits, twenty-five dollars, is 
added to the fund for each month during which there 
are no demerits. Demerits are given for mistakes which 
entail the loss of money, or cause such inconvenience or 
delay as to necessitate the sending of a letter of explana- 
tion to a customer. It may be only a typographical error 
on the part of one of the stenographers, but if it is of a 
serious nature and is not noticed in time for correction 
before going out, her department is given a demerit 



178 FAY ROLL PROBLEMS 

and the description of the mistake is posted on the 
bulletin. 

Employees report their own tardiness in coming to 
business. If any one is late one-third of the total work- 
ing days in the month, his department is given a de- 
merit of ten dollars, which is charged against the bonus 
fund. The amount of the demerit is not charged to the 
individual, but is deducted from the bonus fund, and 
every member must share the loss or the consequences of 
the mistake. This has the moral effect of making each 
employee more careful than he might be if he had to 
stand the loss alone. If any employee is responsible for 
continuous mistakes through carelessness, correction of 
the fault or resignation from the company's service is 
suggested by the other employees. 

Since the inauguration of this system, the percentage 
of mistakes made in the routine of business has been re- 
duced fifty per cent. As a result of the numerous short- 
cuts suggested by the different employees, the entire or- 
ganization has been raised to a plane of more than aver- 
age efficiency. 



"C^ACH employee is an indispensable unit in the operating 
force of the modern office. No matter whether it be the 
office boy, receiving cards of visitors, the stenographer, han- 
dling in her work important secrets of the firm or executing 
details of correspondence; the office clerk, recording, comput- 
ing and analyzing the month's sales or the year's profits, each 
is playing an essential part in the business game, and each is 
deserving of proper credit and consideration on the part of the 
man higher up. 

Marshall D. Wilber 

President. Wilber Mercantile Agency 






XXII 

PLANNING AHEAD FOR THE 
WORKMAN'S NEED 

By P. M. Feiker 

IT RIDS me of a lot of worry," said the superin- 
tendent of labor for one of the largest concerns of 
its kind in the world. "Before our benefit association 
was formed I had dozens of little complaint cases to 
look after. A man would meet with an accident; a few 
days later, a lawyer who made his living by following 
up such cases, would present a claim for damages; or 
the bread-earner of the family had the grippe and 
wouldn't be out for two or three weeks. In the mean- 
time his family would depend upon the grocer and 
butcher. 

"Now, these cases and others are attended to auto- 
matically. A mutual association looks after the man's 
health and pays the bills." 

This is the viewpoint of the man who handles men 
intimately. It makes clear one of the practical, mutual 
advantages of employees' relief, benefit, pension or mu- 
tual associations, as they are termed. 

In all lines of work, in factories large and small, there 
is a tendency today to substitute for the haphazard meth- 
ods of the past a definite plan for the relief of workmen 
who are incapacitated on account of accident, sickness 
or disability which results from advancing years. Many 
a factory superintendent has paid the grocer's bill for 



180 PAY ROLL PROBLEMS 

an employee in need. On the other hand, many bitter 
quarrels have arisen between workmen and firm because 
of damage suits. Many owners have for years acted with 
humanitarian motives in standing between their em- 
ployees and want. But, until recently, the business ad- 
vantage of having a plan for handling such cases auto- 
matically has never been considered in any general way. 
A mutual benefit association is merely a mutual in- 
surance society in which the parties to the contract are 
employer and employee. The employee pays dues to a 
society in whose management he has a voice. The com- 
pany pays some of the overhead expenses of the society 
(depending upon the plan proposed) for the benefits 
which it receives. The plan is developed in different 
ways in different companies. Some of the mutual benefit 
associations have been established for many years and 
interesting stories are told of their early development. 
One of the most interesting of these plans is that of the 
Allis-Chalmers Company. 

OICKNESS, injury and death benefits, with free physi- 
O dan and hospital service are the aims of a highly suc- 
cessful mutual aid association in one concern. 

The formation of this mutual aid society for the work- 
men came about almost by accident. In the fall of 1883 
in what was then the "new" carpenter shop of the Ed- 
ward P. Allis & Company's Reliance Works, a house 
warming and banquet was held. After the evening's 
entertainment it was found that there was $65.10 in the 
treasury. It was suggested that the sum be laid aside as 
the nucleus of an aid fund for the use of needy em- 
ployees. After canvassing among the men, it was found 
that three hundred were willing to cooperate in the 
formation of a society, for which an initiation fee of 



PENSIONS AND BENEFITS 181 

fifty cents and clues of twenty-five cents per month were 
agreed upon. 

Ai'ter the society had lived successfully for three 
months, Mr. E. P. Allis, president of the company, 
volunteered to duplicate, man for man, all dues paid in 
by members. The first year's membership reached a 
total of five hundred and thirty-three and, a year after 
consolidation into the present Allis-Chalmers Company, 
the membership grew to over thirteen hundred. It has 
now about doubled its size. 

The plan under which the society operates is at once 
simple and effective. A member who is injured while 
in the shops or on business for the company is entitled to 
seventy-five cents a day during his disability, not ex- 
ceeding ninety days in any one membership year, and 
the amount he can draw each year is limited to $67.50. 

In case of sickness, the member is entitled to the same 
benefit after the first week. In addition to the weekly 
amount to which the man is entitled, he may also avail 
himsrlf of the services of the society physician free of 
all charge, from whom he obtains medical attendance, 
medicines and dressings. If the services of a specialist 
are required, this expense is also borne by the society. 
In the event of the death of a member a benefit of one 
hundred dollars is immediately paid to his family. 

The physician who is employee! by the society is chosen 
by direct vote of all members. Once when the physi- 
cian was to be chosen, there were ten candidates, and the 
man to whom the choice fell received over half the total 
vote. He holds a contract with the society for a period 
of three years, or until removal. His salary is one dol- 
lar for each member per year. The choice of physician 
is conditional upon his residence within easy access of 
the works. He is required to appoint a substitute who 



182 PAY ROLL PROBLEMS 

may be called in the absence of the regular physician, 
for the convenience of members at either the West Allia 
or Reliance Works. The society physician is required 
to make at least one official visit daily in every case re- 
quiring treatment, until recovery. His signature is re- 
quired in all cases before benefits are paid. 

The working plans by which the Mutual Aid Society 
governed itself were long believed to be comprehensive 
enough to provide for the pressing needs of all injured 
and sick members. But it developed that men were 
sometimes so injured that long periods of disability fol- 
lowed, which soon exhausted the provisions made for 
them by the society and sometimes left the men destitute. 

In the hard times following the depression of 1893, 
these conditions became so acute that it was necessary 
tD provide additional relief and the result was the found- 
ing of the Allis Relief Fund. The entire income for this 
fund is the result of benefits and entertainments, includ- 
ing an annual ball held under the auspices of the aid 
society. 

From the first the custody and control of this fund 
have been retained by the society. The limited amount 
of income early showed the necessity of restricting the 
aid to be granted any one individual and accordingly it 
was enacted that aid to the extent of fifteen dollars per 
month be granted to an injured or sick employee whose 
case was known to be worthy of such support. 

Although the provisions of both society and relief 
fund are very modest, after long experience they have 
proved to be sufficient for the main wants of those in 
misfortune, and the cost to the individual is very low. 

The management of the society's affairs is left entirely 
in the hands of employees, and although the company 
yearly contributes thousands of dollars to its treasury, 



PENSIONS AND BENEFITS 183 

duplicating the amounts contributed by members, it has 
no voice in the management. It merely stipulates that 
medical attendance be given to all who are injured 
whether they are members of the society or not. 

The general officers of the society are president, vice- 
president, secretary and treasurer. An executive com- 
mittee of eighteen, made up of representatives from each 
shop and subdivision, is the actual governing body. This 
body controls all money and transacts all business con- 
nected with the society and relief fund. 

Some idea of the importance of the society's transac- 
tions may be deduced from the fact that since its found- 
ing the total disbursements are upwards of one hundred 
and twelve thousand dollars. Over seventy thousand 
dollars have been paid out in sick and accident benefits 
and over fourteen thousand dollars for death benefits." 
Over twenty-one thousand five hundred dollars have been 
expended for the services of the society's physician. All 
surplus funds are carefully invested in safe interest- 
bearing bonds. 

/CONTRIBUTIONS equal in amount to those of the 
^*s employees are one company's method of encouraging 
its mutual aid society excellent results obtained, 

In some of the concerns which have established benefit 
associations, the company associates itself with em- 
ployees. Such is the case in the Employees' Benefit As- 
sociation of a large threshing machine company. 

The object of this association is to provide members 
with a certain income when sick or disabled by accident, 
either on or off duty and to pay to the families of the 
members certain and definite sums in case of death. It 
maintains a fund which belongs to the employees and 
which is used in paying benefits to them. 



184 PAY ROLL PROBLEMS 

The organization of the association is interesting. The 
executives consist of a board of trustees made up of 
members representing different departments of the com- 
pany, and a superintendent. The headquarters of the 
superintendent are at the general offices of the com- 
pany. 

The benefit fund consists of contributions from mem- 
bers of the organization, income or profit from invest- 
ments or such contributions as may be made by the 
company from time to time. 

The company contributed one thousand dollars to the 
fund at the start, and agreed to contribute five hundred 
dollars more as soon as the membership of the benefit 
association equalled fifty per cent of the company's fac- 
tory employees. An additional five hundred dollars was 
to be contributed as soon as the membership of the 
benefit association equalled seventy-five per cent and a 
further sum of five hundred dollars as soon as the mem- 
bership equalled ninety per cent of the total number of 
factory employees. 

After the first year, the company agreed to contribute 
annually a sum equal to ten per cent of the total amount 
paid by all members. The company also agreed at the 
time the regulations were put into effect that it would 
advance funds for payment of the benefits. 

In handling the benefit association fund, contributions 
from members are used only for the payment of benefits 
due to the members of the organization and for the ex- 
pense of administration. If a surplus accumulates, it 
remains under the control of the members of the asso- 
ciation through their representatives, the board of trus- 
tees; and if a deficit arises, the company is to make tem- 
porary plans to pay it. 

A board of trustees of six members is chosen annually. 



PENSIONS AND BENEFITS 185 

Three of the members of the board of trustees are chosen 
by the employees, who are members of the organization, 
and three are chosen by the board of directors of the 
company. 

The president of the company is also an official mem : 
ber and chairman of the board of trustees and is entitled 
to vote. He has the power to appoint a temporary chair- 
man in his absence. The number of trustees can be in- 
creased or decreased, but at all times one-half must be 
elected by the employees and one-half by the board of 
directors of the company. 

The agent for the trustees is the superintendent of the 
benefit association, who is appointed by the trustees. He 
is also eligible to membership in the association. Under 
the direction of the board of trustees, the superintendent 
has charge of all office boys, clerks and systems, pre- 
scribes the form of blanks to be used, signs all orders for 
benefits, furnishes to the board such reports as it may 
desire, and, in general, acts as the executive of the benefit 
association. He has authority to appoint business and 
medical examiners and visiting nurses and has the gen- 
eral supervision of all medical and surgical affairs of the 
association. 

Benefits are paid for sickness and accident. Special 
benefits are provided in case of serious accident. The 
constitution is so drawn that in case of any grave injury 
or sickness when a member of the association desires to 
accept a lump sum instead of benefits, the superintendent 
has authority to make full and final settlement with such 
a member on terms which may be agreed upon in writ- 
ing. 

Payment in case of death if classed as due to sickness 
is fixed as equal to the total average wages of one 
year or of three hundred working days' average 



186 PAY ROLL PROBLEMS 

wages. If death is caused by accident, the amount paid 
is equal to the total average wages for two years or six 
hundred working days. If a member commits suicide 
before the end of the first year, the beneficiary receives 
one-half of the amount the member has contributed to 
death benefits. 

Pension systems and benefit associations such as these 
tend to establish more closely the commercial relations 
between industrial cost and social responsibility. Many 
concerns are doing the same thing in their own way. Re- 
cognizing that the employee himself cannot or will not 
provide against his time of need, great companies are 
coming more and more to put this provision for the 
future on a definite and sound business basis. 



'T'HE employee must know and feel that he is with the 
* house for the good of the house; and every duty, every 
difficulty, every action is for its service; that the organization 
is bigger than the individual units. If this understanding 
is established, and if, at the same time, a sympathy with the 
policy of the house is aroused in the employee, a real beginning 
for coordinate service has been started. 

John V. Farwell, 

President, John V. Farwell Compur 



XXIII 
MAKING WORK INTERESTING 

By Harrison McJohnston 

TWO years ago a young man entered the employ of a 
manufacturing plant whose policy it was to keep 
the men ignorant about the business. This secrecy ex- 
tended from important plans and proposed develop- 
ments, where it is sometimes essential, down to trivial 
details, concerning which secrecy is seldom necessary 
and is often a disorganizing influence. 

The young man enthusiastically started to work. He 
checked and footed up bills. He asked the meaning of 
the papers he worked on, and met rebuke. Again, he 
asked what was done with them when they left his desk, 
and was "called down." At first this strange treatment 
amused him. Gradually his amusement developed de- 
rision. He settled down for six months with disgusted 
indifference to anything but his own inkpot. Then he 
quit. 

Buried under long, machine-like training was a streak 
of progressiveness in his department head. The loss of 
an ambitious young clerk troubled him. He clearly saw 
the uninterested feelings of the listless automata in his 
department. Everywhere, lack of interest was apparent 
and the expensive result of this lack was much more ap- 
parent He resolved to change things. So he approached 
the general manager with a plan for enthusing the men. 



188 PAY ROLL PROBLEMS 

His chief listened and agreed to let him try out the 
idea. 

Straightway this executive began to tell his men about 
their work, how it fitted in with the work of other de- 
partments and its importance to the business in general. 
Result: within six months the cost of running his de 
partment was reduced twenty per cent. 

TELLING men the story of their work, interesting 
them in its romance, acquainting tliem with unusual 
details these things lighten the load of routine. 

This marked the beginning of an open-minded policy 
in the entire plant. The general manager began to tell 
all the men about the business on a broad scale, me- 
chanics and common laborers as well as the office force. 
A monthly magazine was started. The men read it 
eagerly and started to think about tlie business. Fre- 
quent meetings of foremen, gang foremen and depart- 
ment heads were held. Their interest was focused on 
important problems. "What shall we tell the men?" 
was the leading question. And the cost of this reversed 
policy the time consumed in these meetings, and the 
magazine, which cost about twenty-five dollars each issue, 
were a mere drop out of the bucket of increased profits, 
judged by the present interest, loyalty and initiative of 
all the men in comparison with the lack of these qualities 
two years ago. 

The problem of getting the kind of- news to men that 
will stimulate personal interest and pride in their work 
and will make each man, the scrap sorter and the office 
boy as well as the department head, feel that he is an 
important cog this vital idea of creating "family in- 
terest" among all employees is an organization policy to 
which efficient execution of the actual work of a busi- 



MAKING WORK INTERESTING 189 

ness owes allegiance more than to any other. 

It is safe to say that the lack of family interest among 
the workmen of any organization, caused by the policy 
of extreme secrecy or by failure to get the right kind of 
news to men at the right time, taxes that organization a 
big sum of money in comparison with the cost of judici- 
ously exploiting its business to its own workmen the 
cost, for instance, of keeping one department in touch 
with the work and the plans of other departments. 

A western salesman for a machine-tool manufacturer 
received from the home office a trade circular that an- 
nounced an electric crane a new line with his firm. In 
acknowledging this, the salesman wrote : 

"The Jones Bridge Company has just placed a sixty- 
thousand-dollar contract for cranes. In view of the 
satisfactory service of other machines we have sold this 
company, I feel sure that had I known a month ago that 
you were designing a crane I could have landed an 
order." 

Contrast with this the policy of another company, 
where district sales managers are almost as much a part 
of the engineering staff as though they visited the shops 
every day to find out what is going on there. No im- 
portant change is made in any of this company's ma- 
chines that is not first laid before these district sales 
managers for suggestions, objections or approval. The 
entire organization from shippers' helpers up to the gen- 
eral manager works unitedly for increased output and 
for decreased expense to smash last year's record daily 
and they do it chiefly because the business is advertised 
to them. Monthly and weekly periodicals, also daily 
bulletins, are issued in all the sales districts. These 
bulletins, which are distributed among all the men at 
home and on the road, not only keep salesmen in touch 



190 PAY ROLL PROBLEMS ^ 

with all important production problems and changes, but 
also show their exact relative sales. 

The best news to give out and the best method of com- 
munication largely depend, of course, upon the number 
of employees and the kind of work they do. If the news 
is of a general character interesting to a great number 
of men, it can best be communicated by means of a 
periodical. If it is important news of immediate value, 
bulletins or circulars may be sent out for the signatures 
of those interested. Or, most effective of all methods 
for the big business as well as for the small one, news 
may be disseminated even among the rank and file by 
word of mouth. 

WHEN the executive comes into actual contact with 
his employees and speaks to them as man to man, 
they get broader viewpoints and a new interest. 

"When we took this contract we promised deliveries 
one week earlier than any one else could figure. We 
cut the margin pretty close, perhaps, but if we all think 
and work togetlier, we'll put the job through on time. 
We can't afford to and we won't fall down on this con- 
tract. So u*e'll tell the men and get things started." 

The head of a manufacturing plant thus spoke to a 
council of his factory executives consisting of the super- 
intendent, foremen and gang foremen. He had just an- 
alyzed the strenuous conditions under which an order 
was captured and must be filled. The chief of the plan- 
ning department had sketched the program and the 
schedule on operations, and had indicated the points 
where danger would focus. If any outsider had seen the 
rapt attention given to both speakers, he would have 
been certain that this was a crisis in the affairs of this 
company. But this conference was, and is, a daily oc- 



MAKING WORK INTERESTING 101 

currence. And these meetings tell about all of the suc- 
cess story of this prosperous industry best expressed in 
those significant words of the president: "So we'll tell 
the men." 

Follow the head of this business out into the shops. 
His eye catches the ticklish combination of a new work- 
man machining parts to be used in filling the order of a 
new customer. He picks up a finished wheel, not gin- 
gerly, as one who considers his finger tips, but firmly. 
Calipers and gauges are handy, but he ignores them and 
saves the workman's pride. He is not an inspector of 
parts; he is a handler of men. His way is to mold 
them, not hammer them, into confirmation with the com- 
pany's requirements. 

"That's the GP job, isn't it?" he asks the new work- 
man. Then confides in him: "We had to do some tall 
figuring to land that work. They buy lots of machinery, 
but they think too much about the price, and this is the 
first time we've been able to sell them. We're not mak- 
ing much on' the order. But we count on giving them 
such a good job that they'll see the difference and will 
buy our stuff in the future." 

Not a word of caution or command, no hint of watch- 
fulness or distrust, just a few frank, informing words 
that invest a bunch of ugly castings with meaning of 
vital interest to this laborer. Forthwith this man in 
overalls sees his task and himself in a new light. An 
otherwise wearisome job becomes interesting and worth 
study. The workman feels responsible. His brains are 
needed as well as his hands. He is part of an organiza- 
tion that recognizes the importance of the individual and 
confides in his ability. In this one detail this workman 
feels that he is the company and the organization. He 
is the competitor with rival manufacturers. Without 



192 PAY ROLL PROBLEMS 

ministering to his conceit, without "jollying," he gets 
an admirable first lesson in house spirit. If he measures 
up to the company's standard, the lessons continue until 
they cease to be lessons they become problems he is 
helping the company to solve. All of which results from 
the significant policy: "So we'll tell the men." 

Costly formal annual banquets may be worth while, 
but informal daily meetings with the men are worth 
much more and the one tactful interview of the presi- 
dent with the man in overalls is an example potentially 
worth a dozen formal banquets. 

From that particular instance the step is short to the 
general principle. The dependence of the sales force 
on the factory organization, the handicap of high pro- 
duction cost in figuring contracts successfully, the close 
connection of the sales force with every economy in 
production and the sympathy between profits and pay 
envelopes all these vital interdependencies, constantly 
and concretely impressed on the minds of the men con- 
cerned, build business. 

"I have always tried to show the men," another execu- 
tive explains, "that cooperation is the mercury in the 
thermometer of our earning power. Wages and profits 
rise and fall together. They know this for a fact ; they 
know why it is true; and our interests are never far 
apart." 

This management is willing to tell the men not only 
the cost of materials and labor, but also general costs, 
overhead expense and the elements on which these de- 
pend. Even specifications of contracts are given out 
under certain restrictions to employees who desire to 
know them. 

"Discovering and initiating improved methods are not 
alone foremen's and front-office jobs," he continued. "If 



MAKING WORK INTERESTING 193 

you want your tool makers and machine tenders to add 
the function of thinking to their regular function of 
doing, you must first prove that it is to their advantage. 
This kind of cooperation must spread down before it 
grows up. That is why we tell the men what we are 
sometimes told the men should not know." 

The decisive test of this young president's idea came 
with the financial collapse, of 1907. Three years before, 
he had taken charge of a demoralized industry, had 
eliminated its labor difficulties, reorganized the factory 
and restored the company to dividends. He had just ac- 
complished many economies and cost reductions and was 
moving cautiously onward when the sudden paralysis 
of business forced his hand. 

PUTTING confidence in men is a sure way of having 
them at your side in times of trouble and at all times 
such a policy makes for lower production costs. 

Prom desirable changes his contemplated improve- 
ments became immediate necessities, if production were 
to continue and the force be held together. Machinery 
buyers were cancelling orders. Nothing except radical 
price concessions would tempt them to enter the market. 
Cost cutting must accompany the scaling of prices. But 
cost cutting wa this executive 's treasured purpose. He 
made the slump in orders the front of opportunity, not 
of calamity. Immediately he closed a contract that 
troubled his sales department. Then he called in his 
superintendent and his council of foremen : 

"I have accepted a $10,000 chain job at cost," he con- 
fided. "If I had figured in our usual percentage of 
profit, I could not have closed the order and the shops 
would have to shut down. This condition must govern 
our business for many months. To make sales enough 



194 PAY ROLL PROBLEMS 

to keep us all busy, we must quote prices at about our 
present cost levels. The only alternative is to run half 
time or lay off a lot of men. I don't want to do either. 

"This is your contract and your men's contract just 
as much as it is the company's. If the men can help us 
cut the costs, we'll not have to cut their wages and we 
can take other orders on the same basis. We want their 
ideas, therefore, on getting this work out more expedi- 
tiously. "We '11 make it worth their while to think. We '11 
pay twenty-five dollars for every suggestion which re- 
sults directly or indirectly in cutting cost. And when 
we've run this order through we'll know whether we 
can keep everybody busy at his old rate or whether 
we'll have to cut the. pay roll. Explain the situation to 
the men. Put the issue up to them." 

A few days later the president and superintendent 
sifted out a mass of suggestions, six of which promised 
important savings. One proposed to saw out the blanks 
from which chain links were forged instead of heating 
the bars and forging them to length by hand. With a 
form cutter at least forty bars could be sawed cold at 
one time. Two forgings were not necessary. Five men 
could do the work that ten do now and in half the time. 

Many other valuable suggestions were proposed and, as 
the job progressed through the shops, change after 
change was made. When the actual costs on this job 
were finally figured the net profit for the company was 
four per cent! 

Every man took a personal pride in the successful 
outcome. They had begun to think operations as well as 
execute them. They had demonstrated for themselves 
the value of cooperation and the reality of their mutual 
interests with the company. They had developed indi- 
vidual organization consciousness. They were a team 



MAKING WORK INTERESTING 195 

the principals in a big fight because they were told 
what the fight meant. 

Not long ago a visitor in a great electrical plant saw 
this inscription plainly chalked on the side of a huge 
piece of apparatus: THIS MACHINE GOES TO PERU IT 

WILL HELP BUILD THE RAILROAD ACROSS THE ANDES. 

"Traveling advertisement?" the visitor asked the 
superintendent. But that gentleman smiled as he an- 
s\\vred: "No, only our ad to our own men here in the 
plant. We let the employees know all about the products 
of the firm. It's good policy. Our shippers will handle 
that machine more carefully, see that it is blocked up 
and fastened more securely because they know how far 
it has to go. 'Going to Peru!' they will say. 'That's a 
mighty long trip. "We'll have to. fix her up so she'll 
stand that trip and we'll have to be dead sure every 
part is all right, for she'll be a long way from the re- 
pair shop up on top of the Andes.' You see, they will 
take great interest in that shipment. Instead of just a 
huge, troublesome block of metal, that machine at once 
is invested with a personality. 

"I have never known it to fail," he concluded, "that 
when you take the men into your confidence it proves 
a great incentive to better work." 



T HAVE nrrrr Jtnotm of a great butinrtt ntccei* without 
* a peronalily. I hate never known of a great ptrtonaiity 
in burinet* rrithout a tyttrm. 

Henry C. Lytton 

Fmldrat. TtM Hub. Cbtcaco 



XXIV 

APPOINTING THE EMPLOYEE 
HIS OWN JUDGE 

By A. L. Filene 
General Manager and Treasurer, Wm. Filene's Sons Company 

JUSTICE in all decisions involving the relations be- 
tween employer and employee is the essential for 
holding a loyal working force. Give the employee a 
chance to present his side of the case before a jury which 
he has helped elect and he must recognize the fairness 
of its decision whether it is for or against him. 

I consider the right of arbitration given to our em- 
ployees, and the way it has been used during this period 
of years, the most important contribution we are making 
toward the promotion of practical and just cooperation 
between employer and employee ; and I believe that in its 
essential principles this type of arbitration can be ap- 
plied to any business. 

Since July, 1901, an arbitration board has been annu- 
ally elected by the Filene Cooperative Association an 
association to which every employee of William Filene's 
Sons Company belongs by virtue of employment. This 
board is made up of a representative from each of the 
various sections of the house. Having jurisdiction at 
first only over matters regarding reductions in salary, 
it has gradually improved its usefulness and value until 
today it has the power of deciding all questions of dis- 
agreement as to wages, positions, tenure of employment 
and any point of controversy between employer and 



EMPLOYEE ARBITRATION 197 

employee or between one employee and another. 

The board is at present composed of nine members, all 
of whom are employees and are elected by general vote 
of the employees. The chairman is appointed by the 
president of the F. C. A. 

So satisfactory has been the work of these boards 
that there is probably not a person in the store who 
would give up the arbitration board. We have had more 
than 400 cases of arbitration, and a professor of law 
who has made a study of them says that for average 
good sense and justice the decisions compare well with 
some 10,000 civil cases which he has studied. From a 
two years' summary of the cases some interesting figures 
have been obtained. Forty per cent of the cases have 
been decided in favor of the firm, fifty-two per cent in 
favor of the employees. The other eight per cent were 
withdrawn or settled outside of the arbitration board. 
Dismissals, missing sales slips and cashier's shortages 
constitute the basis for appeal in the majority of cases. 

JUDGMENT of ditpuie*, whether between employ*** 
or between employer and employee by juries they have 
elected, make* for a satisfied working force. 

In addition to this arbitration board elected by em- 
ployees, any profit sharer in the Filene corporation can 
bring any question before a special Profit-sharer's Arbi- 
tration Committee of three. One member of the com- 
mittee is chosen by the appellant, one by the manage- 
ment, the third by these two. 

At first sight it might appear that the employees, 
knowing their right to appeal against a decision of those 
in authority, would take advantage of their position, 
and discipline would be lax. Several years' trial of 
the plan has shown that the attitude of the employees 



198 PAY ROLL PROBLEMS 

is exactly the opposite. 

That employees may understand their privileges and 
their relations to the arbitration board, a printed card 
is given to all employees when they enter the organiza- 
tion. A similar statement is printed on the pay envel- 
opes as shown : 



You have the right to appeal to the Arbitration 
board any question relating to the powers given 
you, your scope of work, promotion or remunera- 
tion. The Arbitration board is elected annually by 
the employees, and any appeal should be made 
to the representative of your division, Mr 

Positions in the house are filled by promotion, 
if possible. 

The important factors in considering you for 
promotion are: 

1. Successful work in your present position. 

2. The fact that you have developed an un- 

derstudy capable to take up your work. 

3. The fact that you have made yourself 

familiar with the duties of the position 
desired. 

Go freely to the F. C. A. Counsellor for advice 
on either personal or business matters. Her prov- 
ince is to help clear the way for you to succeed. 

Keep a copy of the rule book always in your 
possession know your rules and live up to them in 
every particular. The Filene Co-operative Associ- 
ation, of which you are a member, has power to 
make or change any store rule by a majority vote. 



Because there is an appeal to the arbitration board, 
a floor manager or head of a department or any execu- 
tive is very careful in weighing all sides of a question 
before discharging an employee. Floor managers have 
the right of removal, but not of dismissal. If a clerk 
is removed by the floor manager she takes her case to the 
store manager. If he believes it just, he may either rein- 



EMPLOYEE ARBITRATION 199 

state her or transfer her to some other department. And, 
on the other hand, if he decides to dismiss the sales- 
woman, she can appeal to the arbitration board, whose 
decision is final. 

Because of the fairness of this treatment, a strong 
feeling of respect for decisions has been engendered in 
the store. If an employee is discharged, a feeling is 
manifest that he deserved it. 

One case in particular makes this point clear. An em- 
ployee in a position of responsibility appropriated money 
not his own. When his theft was discovered and he had 
been discharged by the store manager, he appealed to the 
arbitration board for reinstatement, urging a number 
of extenuating circumstances which were not without 
effect. The board, however, upheld the manager's posi- 
tion and he left the store. 

Under these circumstances and ordinary conditions, 
this employee would have felt embittered toward the 
management and the store, however just was his dismis- 
sal. In this case, however, he had been given an oppor- 
tunity to present his side of the case before a jury of 
his peers and make the best plea possible, and when he 
left the store it was with the double conviction that his 
dismissal was just and that it was not a case where the 
management would not show mercy, but one where 
his fellow employees were compelled to insist upon his 
dismissal for their own protection and the good of the 
business. 

Nor is the employee the only party benefited by this 
method of handling dismissals. A clerk in a bookkeep- 
ing department was doing poor work and was removed 
by the department head. The store manager, when the 
case came to him, decided to transfer the man to his 
own department and took occasion to have him under- 



200 PAY ROLL PROBLEMS 

stand that inefficient service was the reason for his 
transfer. 

A few months later this same clerk was selected by 
the head of a department to be his understudy and 
showed such ability that he was advanced to a position 
of responsibility where he was in charge of the men 
with whom he had not been able to make a showing in 
the first place. The man, appreciating the situation, had 
taken night courses of instruction and developed himself. 
The firm had retained a valuable and loyal employee. 



TT IS very desirable to take men into employment when 
they are young. We do not want to take on men who 
have not within themselves the capability of becoming execu- 
tives. Our best executives today came in as boys and made 
the business a part of their nature. We are taking in many 
young men who want to make their way in the world, and if 
they can devote themselves to the tasks before them, they will 
succeed. The incentive to work is great if the man knows that 
sure advancement awaits him and the department executive 
has great inducement to train an understudy, if he knows by 
doing so he is not training himself out of employment, but 
turning himself into a higher and more remunerative occu- 
pation. 

Clarence M. Woolley 

President, American Radiator Company 



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